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Bain & Company just issued some zero-coupon bonds. The bonds have a par value of $1,000, mature in 2 years, and were sold at a
Bain & Company just issued some zero-coupon bonds. The bonds have a par value of $1,000, mature in 2 years, and were sold at a price of $825. The firm's marginal tax rate is 40%. What is the annual after-tax cost of this debt? Assume semi-annual payments in your calculations.
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