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Reuven Corp. is undergoing a major expansion. The expansion will be financed by issuing new 18 year, $1000 par, 7% semiannual coupon bonds. The market
Reuven Corp. is undergoing a major expansion. The expansion will be financed by issuing new 18 year, $1000 par, 7% semiannual coupon bonds. The market price of the bonds is $940 each. Reuven's flotation expense on the new bonds will be $80 per bond. The corporation is in the 35% tax bracket. What is the post-tax cost of debt cor the newly issued bonds?
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