Rework problem 7 as follows: Assume an 8 percent coupon rate. What effect does changing the coupon rate have on the firm’s after-tax cost of capital?Problem 7 detail: Sincere Stationaery Corporation needs to raise $500 000 to improve it’s manufacturing plant. It has decided to issue a $1 000 per value bond with a 14 percent annual coupon rate and a 10-year maturity. The investors require a 9 percent rate of return.
