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The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new $1,000 par value bonds at

The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new $1,000 par value bonds at a net price of $915.The coupon interest rate is 1111 percent and the bonds would mature in 19 years. If the company is in a 40 percent tax bracket, what is the after-tax cost of capital to Zephyr for bonds?

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