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A firm is planning to issue new 10-year bonds with a face value of $1,000. The coupon rate is 10% paid semiannually. The expected price
A firm is planning to issue new 10-year bonds with a face value of $1,000. The coupon rate is 10% paid semiannually. The expected price of the bond is $980. In order to issue new bonds, the firm has to pay 6% of the issuing price of the bonds. If the tax rate is 34%, what is the before-tax cost of capital? 11.34% 7.48% 9.39% 8.95% 10.33%
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