apter $14$

st of Capital$--$

Question $9,$ P$14-18($similar to$)$

Part $1$ of $3$

HW Score: $0\%,0$ of $34$ points

Points: $0$ of $5$

$($Cost of debt$)$ Gillian Stationery Corporation needs to raise $$605,000$ to improve its manufacturing plant. It has decided to issue a $$1,000$ par value bond with an annual coupon rate of $7\mathrm{.}5$ percent with interest paid semiannually and a $10-$year maturity. Investors require a rate of return of $10\mathrm{.}4$ percent.

a$.$ Compute the market value of the bonds.

b$.$ How many bonds will the firm have to issue to receive the needed funds?

c$.$ What is the firm's after$-$tax cost of debt if the firm's tax rate is $34$ percent?

a$.$ The market value of the bonds is $ $($Round to the nearest cent.$)$