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A corporation needs to raise $ 1 , 0 0 0 , 0 0 0 to finance a project. It can either float a bond

A corporation needs to raise $1,000,000 to finance a project. It can either float a bond for the amount at 10 percent annual rate of interest or sell preferred stock with an 8% dividend rate. The firm has a 40 percent tax rate. What is the yearly, after-tax cost of (a) this debt? (b) The preferred?

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