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Nico Trading Corporation is considering issuing long - term debt. The debt would have a 3 0 year maturity and a 1 0 percent coupon

Nico Trading Corporation is considering issuing long-term debt. The debt would have a 30 year maturity and a 10 percent coupon rate. In order to sell the issue, the bonds must be underpriced at a discount of 5 percent of face value. In addition, the firm would have to pay flotation costs of 5 percent of face value. The firm's tax rate is 35 percent. Given this information, the after tax cost of debt for Nico Trading would be _______.
The answer is 7.26% but how?

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