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COST O F DEBT = > ' K D ' New Jet Airlines plants to issue 1 4 year bonds with a par value of

COST

O F

DEBT

= >' K D'

New Jet Airlines plants to issue

14

year bonds with a par value of

=

1, 000

zero coupon bonds The bends have a market price of $

380 .

Flotation costs on new debt will be

4 %

of the selling price. If the firm has a

35 %

marginal tax bracket, compute the cost of debt for this company.

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