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(Cost of debt) Carraway Seed Company is issuing a $1000 par value bond that pays 7 percent annual interest and matures in 8 years. Investors

(Cost of debt) Carraway Seed Company is issuing a $1000 par value bond that pays 7 percent annual interest and matures in 8 years. Investors are willing to pay $930 for the bond. Flotation costs will be 13 percent of market value. The company is in a 40 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?

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