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Suppose firm ABC can issue new 10-year bonds at par value. The bonds pay 6-percent annual coupons, and the marginal tax rate is 30%. The
Suppose firm ABC can issue new 10-year bonds at par value. The bonds pay 6-percent
annual coupons, and the marginal tax rate is 30%. The before-tax issuing costs are 2.5%
of par. Estimate the firm's after-tax cost of debt.
answer 4.42%
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