Joy, Inc. is planning on issuing new bonds to raise capital. Joy’s investment banking firm indicates that different matu

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Joy, Inc. is planning on issuing new bonds to raise capital.Joy’s investment banking firmindicates that different maturities will carry different couponrates and thus sell at differentprices. Each bond issue, however, will have a $1000 par value, withflotation costs of $50 perbond. Joy’s tax rate is 21%.a. Calculate Joy’s current required rate of return of theirlong-term debt for each of thefollowing alternatives.
b. Assume that Joy, Inc. plans on issuing new long-term debt tosell at par. Calculate thebefore-tax and after-tax cost of debt for each alternative.