Alsip Glass and Mirror is about to issue a bond with the help of
Becker Investment Bank. The bond will be a twenty-year, semiannual bond with
a 7% coupon rate and a $5,000 par value. A rating agency has given the bond an
AA1 rating. Bonds with this maturity and this rating are currently selling to yield
8.5%. Alsip Glass and Mirror has requested authorization from the SEC to sell
2,000 of these bonds. If Becker Investment Bank is receiving a 2.5% commission
on the sale of these bonds, what will the total proceeds be for Alsip? What is the
cost of these bonds to Alsip in terms of cost of capital?