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not sure if these are right Cold Duck Brewing Company is considering issuing a new 25-year debt issue that would pay an annual coupon payment
not sure if these are right Cold Duck Brewing Company is considering issuing a new 25-year debt issue that would pay an annual coupon payment of $90. Each bond in the issue would carry a $1,000 par value and would be expected to be sold for a price equal to its par value. Cold Duck's CFO has pointed out that the firm would incur a flotation cost of 2% when initially issuing the bond issue. Remember the flotation costs will be subtracted from the proceeds the firm will receive after issuing its new bonds. The firm's marginal federal-plus-state tax rate is 359. To see the effect of fiotation costs on Cold Duck's after-tax cost of debt (generic), calculate the after-tax cost of the firm's debt issue with and without its flotation costs, and select the correct after-tax costs in percentage form) After-tax cost of debt without flotation cost: 5.8500% After-tax cost of debt with flotation cost: 5.9846% This is the cost of new debt, and it is different from the average cost of capital raised in the past
not sure if these are right
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