New Jet Airlines plans to issue 16-year bonds with a par value of $1,000 that will pay
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Question:
New Jet Airlines plans to issue 16-year bonds with a par value of $1,000 that will pay $40 every six months. The bonds have a market price of $1,340. Flotation costs on new debt will be 7%. If the firm has a 35% marginal tax bracket, what is cost of existing debt?
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