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The company issues a $1,000 par value bond that pays 7% annual interest and matures in 15 years. Investors are willing to pay $958 for

The company issues a $1,000 par value bond that pays 7% annual interest and matures in 15 years. Investors are willing to pay $958 for the bond. Flotation costs will be 11 % of market price. The company is in the 34% marginal tax bracket. Calculate the cost of debt.

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