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Ezally Corp. is investing in a new machine that will be financed by issuing new 25-year, $1,000 par, 7.5% semiannual coupon bonds. The bonds are
Ezally Corp. is investing in a new machine that will be financed by issuing new 25-year, $1,000 par, 7.5% semiannual coupon bonds. The bonds are currently selling in the market for $920. Flotation costs on newly issued bonds are $70. The corporations marginal tax rate is 35%. What is the post-tax cost of debt for the newly issued bonds?
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