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1. You are going to purchase a bond with a par value of 1000 and a discount rate of .07. It pays 8% coupons yearly

1. You are going to purchase a bond with a par value of 1000 and a discount rate of .07. It pays 8% coupons yearly for 10 years. Determine the Bond Value.

2. Let say the above bond has 2% in floatation costs and the MTR is 40%. What is the after tax cost of debt to the bond seller?

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