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Bender and Co. is issuing a $1,000 par value bond that pays 9% interest annually. Investors are expected to pay $918 for the 10-year bond.

Bender and Co. is issuing a $1,000 par value bond that pays 9% interest annually. Investors are expected to pay $918 for the 10-year bond.

Bender will have to pay $33 per bond in flotation costs.

What is the cost of debt if the firm is in the 34% tax bracket?

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