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A bond has a $1,000 face value and a coupon rate of 6.2% paid annually. A new issue would have a flotation cost of 12.3%
A bond has a $1,000 face value and a coupon rate of 6.2% paid annually. A new issue would have a flotation cost of 12.3% and a market value of $1,135.22. The bond matures in 15 years. The firm's marginal tax rate is 35%. What is the after-tax cost of debt?
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