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If they can sell new 30 year maturity, 6% coupon, 6% yield to maturity bonds at their face value, the investment bankers will charge 4%
If they can sell new 30 year maturity, 6% coupon, 6% yield to maturity bonds at their face value, the investment bankers will charge 4% of the sales price as their flotation fee. What is their effective pre-tax cost of borrowing?
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