(Cost of​ debt) Sincere Stationery 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 of 10 percent...

(Cost of​ debt)

Sincere Stationery 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 of 10 percent with interest paid semiannually and a 10​-year maturity. Investors require a rate of return of 9 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?