Sincere Stationery Corporation needs to raise $800,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with an annual coupon rate of 14 percent and a maturity of 18 years. The investors require a rate of return of 11 percent.

a. Compute the market value of the bonds.

b. What will the net price be if flotation costs are

15

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 marginal tax rate is 24 percent?

a. What is the market value of the bonds?

$enter your response here

(Round to the nearest cent.

b. What will the net price be if flotation costs are 15

percent of the market price?

$enter your response here

(Round to the nearest cent.)

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

enter your response here

bonds(Round to the nearest whole number.)

d. What is the firm's after-tax cost of debt if its marginal tax rate is 24 percent?

enter your response here%

(Round to two decimal places.)