9.24

The Cost of Debt and Flotation Costs. Suppose a company will issue new 20 -year debt with a par value of $1,000 and a coupon rate of 8%, paid annually. The issue price will be $1,000. The tax rate is 25%. If the flotation cost is 2% of the issue proceeds, then what is the aftertax cost of debt? Round your answer to two decimal places. % What if the flotation costs were 11% of the bond issue? Round your answer to two decimal places. %