(Cost of debt) Gillian Stationery Corporation needs to raise $593,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value

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(Cost of​ debt) 

Gillian Stationery Corporation needs to raise $593,000

to improve its manufacturing plant. It has decided to issue a $1,000

par value bond with an annual coupon rate of 7.7

percent with interest paid semiannually and a 10​-year

maturity. Investors require a rate of return of 10.2 percent.

a. Compute the market value of the bonds.

b.How many 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 tax rate is

34 percent?

a.  The market value of the bonds is

​$

​(Round to the nearest​ cent.)

b.  The number of bonds that the company needs to sell is

bonds. ​ (Round up to the nearest​ integer.)

c.  The​ firm’s after-tax cost of debt is

​(Round to two decimal​ places.)

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