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Monted Inc. $1,000 par value corporate bonds mature in 19 years and sell in the market for $1,180. The bonds offer a coupon rate of
Monted Inc. $1,000 par value corporate bonds mature in 19 years and sell in the market for $1,180. The bonds offer a coupon rate of 6%, paid semiannually. Flotation costs on newly issued bonds are $50 per bond. The corporation is in the 35% tax bracket. What is the companys pre-tax cost of debt on the newly issued bonds?
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