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Suppose your firm issues a 100,000,000 5-year bond with a coupon rate of 8% per annum (assume annual compounding). The bond will sell at face

Suppose your firm issues a €100,000,000 5-year bond with a coupon rate of 8% per annum (assume annual compounding). The bond will sell at face value to investors. The underwriting spread is an up-front fee of 2%.

What is the actual cost of this debt?

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