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Question: 17 cost ofdebt sincere stationery corporation needs to raise rs600000...

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17. (Cost ofDebt) Sincere Stationery Corporation needs to raise Rs600,000 to improve its manufacturing plant. It has decided to issue a Rs1,000 par value bond with a 14 percent annual coupon rate and a 10-year maturity If the investors require a 13 percent rate of return. a. Compute the market value of the bonds. b. What will the net price be if flotation costs are 11 percent of the market price? c. How many bonds will the firm have to receive the needed funds? d. What is the firms after-tax cost of debt if its marginal tax rate is 35 percent?
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