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The company ABC finances its operations and growth opportunities, using common equity, debt, and preferred equity. It issued a 8 year, 5 percent (coupon rate

The company ABC finances its operations and growth opportunities, using common equity, debt, and preferred equity. It issued a 8 year, 5 percent (coupon rate of 5%) bonds 2 years ago. This annual-coupon bond is currently selling for $960, and its face value is $1000.

What comes closest to ABCs pre-tax cost of debt (in %)?

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