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Bavarian Sausage just issued a 10 year, 12% coupon bond. The face value of the bond is $1,000 and the bond makes semiannual coupon payments.

Bavarian Sausage just issued a 10 year, 12% coupon bond. The face value of the bond is $1,000 and the bond makes semiannual coupon payments. If the bond is trading at 86.725% of face value, the tax rate is 40%, what is the after tax cost of bonds?

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