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( Cost of debt )Carraway Seed Company is issuing a $1,000 par value bond that pays 11 percent annual interest and matures in 6 years.

(Cost of debt)Carraway Seed Company is issuing a $1,000 par value bond that pays 11 percent annual interest and matures in 6 years. Investors are willing to pay $970 for the bond. Flotation costs will be 11 percent of market value. The company is in a 25 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?

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