The cost of debt that is relevant when companies are evaluating new investment projects is the marginal cost of the new debt that is to be raised to finance the new project. The required return (or cost) of newly-issued debt is often referred to as the financial capital raised by a firm in the past. rate. It usually differs from the average cost of the Purple Lemon Shipbulders is considering issuing a new twenty-year debt issue that would pay an annual coupoh payment of $70. Each bond in the issue would carry a $1,000 par value and would be expected to be sold for a market price equal to its par value. Purple Lemon's CFO has pointed out that the firm will incur a fotation cost of 1% when initially issuing the bond issue. Remember, these fiotation costs will be from the proceeds the firm will recelve after issuing its new bonds. The firm's marginal federal-plus-state tax rate is 45Ya4 To see the effect of flotation costs on Purple Lemon's after-tax cost of debt, cakulate the before-tax and after-tax costs of the firm's debt issue with and without its flotation costs, and insert the correct costs into the boxes. (Hint: Round your answer to two decimsl places.)