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Assume a firm has $ 1 , 0 0 0 par amount of debt outstanding. It matures in ten years, pays interest annually, and has

Assume a firm has $

1, 000

par amount of debt outstanding. It matures in ten years, pays interest annually, and has a

10 %

coupon payment. What is the current price of the debt? If the firm

s tax rate is

35 %,

what is the cost of debt?

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