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Compute the cost of the following: a. A bond that has a $1000 par value (face value) and a contract or coupon interest rate of
Compute the cost of the following:
a. A bond that has a $1000 par value (face value) and a contract or coupon interest rate of 9 percent. A new issue would have a flotation cost of 5 percent of the $1100 market value. The bonds mature in 10 years. The firm's average tax rate is 30 percent, and its marginal tax rate is 34 percent.
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