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1) Carraway Seed Company is issuing a $1,000 par value bond that pays 4 percent annual interest and matures in 14 years. Investors are willing

1) Carraway Seed Company is issuing a $1,000 par value bond that pays 4 percent annual interest and matures in 14 years. Investors are willing to pay $960 for the bond. Flotation costs are 7 percent of the market value and the company is in a 20 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?

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