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Two year ago, a company issued $20 million in long-term bonds at par value with a coupon rate of 9%. The company has decided to

Two year ago, a company issued $20 million in long-term bonds at par value with a coupon rate of 9%. The company has decided to issue and additional $20 million in bonds and expects the new issue to be priced at par value with a coupon rate of 7%. The company has no other debt outstanding and has a tax rate of 40%. What is the companys after-tax cost of debt?

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