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Belton is issuing a $1,000 par value bond that pays 12 percent annual interest and matures in 5 years. Investors are willing to pay $940
Belton is issuing a $1,000 par value bond that pays 12 percent annual interest and matures in 5 years. Investors are willing to pay $940 for the bond. Flotation costs will be 13 percent of market value. The company is in a 38 percent tax bracket. What will be the firm's after-tax cost of debt on the bond? (as a percentage, round to 2 decimal places)
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