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Ford wants to raise debt by issuing bonds. They were informed by their investment banking consultant that they would have to pay a commission of
Ford wants to raise debt by issuing bonds. They were informed by their investment banking consultant that they would have to pay a commission of 1.0% of the selling price on new issues. The company currently has an 6% coupon rate bond issued, which pays interest semi-annually, will mature in 6 years, has a $1000 face value, and is currently trading at $1037. Calculate the appropriate cost of debt for Ford?
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