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Suppose that Rahway Inc.'s only debt issue is a par bond (look that up! It means price = face value but that tells you the
Suppose that Rahway Inc.'s only debt issue is a par bond (look that up! It means price = face value but that tells you the relation between the coupon rate and the discount rate - you can go back to the bond notes in Module 2.) Further suppose that this bond, just issued, has a coupon rate of 5.8%. What should be the firm's cost of debt, as a percent to two places if Rahway is in the 26% tax bracket
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