Sincery Station Corp needs to raise $ 527000 to improve its manufacturing plant. It has decided to issue 1000 par value bond with an annual coupon rate of 11.1 percent with interest paid semi-annually and a 15 yrs maturity. Investors require a rate of return of 8.9%.
A) Compute the market value of the bonds
B) How many bonds will the firm have to issue to receive the needed funds?
What is the firm after tax- cost f debt if the firm tax rate is 34%?