Cost of debt gillian stationery corporation needs to raise, Financial Management

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Cost of debt gillian stationery corporation needs to raise

(Cost of debt) Gillian Stationery Corporation needs to raise $569,000 to improve its manufacturing plant. It has decided to issue a $1,00 par value bond with an annual coupon rate of 8.4% with interest paid semi-annually at 15-year maturity. Investors require a rate of return of 10.7%.

a. Compute the market value of the bonds

b. How man 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 take rate is 34%?

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