Sincere Stationary Corporation needs to raise $500,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with an annual coupon rate 10.0 percent with interest paid semiannually and a 10-year maturity. Investors require a return of 9.0 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 firms after-tax cost of debt if the firms tax rate is 34 percent

Km for the following Individual or component costs of capital) Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this compute the cost of capital for the a. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11.4 percent mat is paud semiannually. The bond is currently selling for a price of $1,121 and will mature in 10 years The firm's tax rate is 34 percent b. If the firm's bonds are not frequently traded, how would you go about determining a cost of debt for this company? A new common stock issue that paid a $174 dividend last year. The par value of the stock is $15, and the firm's dividends per share have grown at a rate of 81 percent per year. This growth rate is expected to continue into the foreseeable tuture The pnce of this stock is now $27 12 d. A preferred stock paying a 10.7 percent dividend on a $126 par value The preferred shares are currently selling for…

Setrakian Industries needs to raise $71.8 million to fund a new project. The company will sell bonds that have a coupon rate of 5.78 percent paid semiannually and that mature in 25 years. The bonds will be sold at an initial YTM of 6.46 percent and have a par value of $2,000. How many bonds must be sold to raise the necessary funds?

Write the formula for the cost of capital. Explain how you would estimate each component of the cost of capital. Assume you would like to estimate the cost of debt for XYZ Company. XYZ’s bond has a semi-annual 5.25 % coupon rate and a par value of $1,000, with a market price of 86 percent of the par. Assume a number of years to maturity that has not been chosen by any other students between 10 to 50 years, then estimate the cost of debt for XYZ. Assume the beta of XYZ is 1.20, and the capital structure of XYZ is 70 % equity financing and 30 % debt financing, and the tax rate is 21 %. Estimate the cost of capital for XYZ Company.

Universal Exports Inc. is a small company and is considering a project that will require $650,000 in assets. The project will be financed with 100% equity. The company faces a tax rate of 25%. What will be the ROE (return on equity) for this project if it produces an EBIT (earnings before interest and taxes) of $155,000?   10.73%   17.88%   18.77%   12.52%     Determine what the project’s ROE will be if its EBIT is –$50,000. When calculating the tax effects, assume that Universal Exports Inc. as a whole will have a large, positive income this year.   -4.64%   -6.67%   -5.22%   -5.8%     Universal Exports Inc. is also considering financing the project with 50% equity and 50% debt. The interest rate on the company’s debt will be 12%. What will be the project’s ROE if it produces an EBIT of $155,000?   28.11%   18.74%   26.77%   21.42%     What will be the project’s ROE if it produces an EBIT of –$50,000 and it…

Suppose you are trying to raise $63415947 to fund a project and you are going to use 42% debt. An American corporate bond has a coupon rate of 1.8% and matures in 25 years. If the yield to maturity for bonds similar to this one is 9.0%, what is the number of similar bonds you would need to sell to raise the necessary funds? Suppose you are trying to raise $71898234 to fund a project and you are going to use 46% debt. An American corporate bond has a coupon rate of 1.4% and matures in 24 years. If the yield to maturity for bonds similar to this one is 3.8%, what is the number of similar bonds you would need to sell to raise the necessary funds?