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The Cost of Debt and Flotation Costs. Suppose a company will issue new 2 5 - year debt with a par value of $ 1

The Cost of Debt and Flotation Costs.
Suppose a company will issue new 25-year debt with a par value of $1,000 and a coupon rate of 9%, paid annually. The issue price will be $1,000. The tax rate is 25%. If the flotation cost is 2% of the issue proceeds, then what is the after-tax cost of debt? Round your answer to two decimal places.
%
What if the flotation costs were 10% of the bond issue? Round your answer to two decimal places.
%

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