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A firm has 1 bond issue outstanding with a par value of $1,000 and a coupon rate of 9.50%. The bond matures in 7 years.
A firm has 1 bond issue outstanding with a par value of $1,000 and a coupon rate of 9.50%. The bond matures in 7 years. The firm's marginal tax rate is 21%. What is the firm's cost of debt if the bond's current price is $1,065? Assume coupon payments are made semi-annually.2
a. 8.26%
b. 3.26%
c. 4.13%
d. 6.52%
show formula and all work in excel
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