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A 10-year $1,000 bond sells for $980, and the flotation costs are 2% of the par value. The coupon rate is 8%. Put in the
A 10-year $1,000 bond sells for $980, and the flotation costs are 2% of the par value. The coupon rate is 8%. Put in the values of the variables and calculate the before-tax cost of capital from this bond?
Coupon dollars (I) =
Flotation costs in dollars (FC) =
term (n) =
Price (P) =
Net proceeds (N_p) =
rd = %
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