(Cost of debr Sincere Stationery Corporation needs to raise $750,000 to improve its manufacturing plant It has decided to issue a $1,000 par value bond with an annual coupon rate of 16 percent and a maturity of 19 years. The investors require a rate of return of 9 percent. a. Compute the market value of the bonds b. What will the net price be if flotation costs are 9 percent of the market price? c. How many bonds will the firm have to issue to receive the needed funds? d. What is the firm's after-tax cost of debt if its average tax rate is 25 percent and its marginal tax rate is 32 percent? e. Rework the problem as tollows: Assume a coupon rate of 7 percent f. What effect does changing the coupon rate have on the firm's after-tax cost of capital? Why is there a change? a. if the bond's annual ooupon rate is 16%, what is the market value of the bond? $Li (Round to the nearest cent.) b. What will the net price be if flotatian costs are 9 percent of the market price? Round to the nearest cent.) c. How many bonds will the firm have to issue to receive the needed funds? bonds (Round to the nearest whole number) d. What is the firm's after-tax cost of debt if its marginal tax rate is 32 percent? % (Round to two decimal places.) e, if the bond's annual coupon rate is 7%, what is the market value of the bond? $ (Round to the nearest cent.) What will the net price be if flotation costs are 9 percent of the market price? Round to the nearest cent.) How many bonds will the firm have to issue to receive the needed funds? bonds (Round to the nearest whole number) What is the firm's after-tax cost of debt if its marginal tax rate is 32 percent? % (Round to two decimal places.) f. Which of the following statements best describes the effect of coupon rate on the firm's after-tax cost of debi? (Select the best choice below.) OA. Alower coupon rate lowers the bond price but increases the lotation cost. As a result, the after-tax cost of debt is slightly raised B. A lower coupon rate increases the bond price and increases the flotation cost. As a result, the after-tax cost of debt is slightly raised OC. Alower coupon rate lowers the bond price and lowers the otation cost. As a result, the after tax cost of debt is sligntly reduced. O D. A lower coupon rate increases the bond price but lowers the flotation cost. As a result, the after-tax cost of debt is slightly reduced