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Garden Industries can sell 15-year, $1,000 par value bonds paying annual interest at a 12% coupon rate. The bonds can be sold for $1010 each,
Garden Industries can sell 15-year, $1,000 par value bonds paying annual interest at a 12% coupon rate. The bonds can be sold for $1010 each, flotation costs of $25 per bond. The firm is in the 40% tax bracket.
a. Find the net proceeds from sale of the bond Nd
b. Calculate the before-tax and after-tax costs of debt.
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