Corporation has debt outstanding with a par value of $1,000 per bond. The face value of all of their debt is $150,000,000 and it is due in 15 years. The coupon rate is 9% compounded semi-annually. The bonds are currently priced to yield 10%. The corporate income tax rate is 40%. What is the current market value of the outstanding debt? What would be the after-tax cost to the firm of issuing new debt?

I don't know how to do it about market price per bond. also, how to get .05.

# of bonds outstanding = $150,000,000/$1,000 = 150,000 Market price per bond: 1 (1.05)30 1000 = $45 - .05 1(105)30 = $923.14 Market value of the total debt = 150,000 x $923.14 = $ 138,471,000 After tax cost of new debt = RD (1-Tc) = 10%(1-.40) = 6%