The cost of debt that is reievant when companies are evaluating new investment projects is the marginal cost of the new debt that is to be raised to finghice the-new project The required return (or cost) of previoushy issued debt is often referred to as the rate. it usuaily differs from the cost of newiy raised financial copital. Peaceful Book binding Company is considering issuing a new twenty-vear debt issue that would pay an annual coupon payment of sab. Each bond in the issue would carry a $3,000 par yalue and would be expected to be sold for a market price equal to its par value. Papcy cfo has pointed out that one firm wilt incur a flotaron cost of 1% when initally atsing the bond issue Remember, these fotabon costs wiil be from thie proceeds the form will recelve after isying its new bonds. The firm y marginal federal-plys-state tax fate is 30 . To see the efluct of Aocabion costr on PBECx afer-tax cost of deoc, caiculace the before-tar and after-tar costs of the firm 's debt issice with and without its fotation costs, and insert the comect costs inte the bones. (Hint: Aound rour answer fo fwo depinal places.)