Universal Manufacturing plans to issue long term

bonds to raise funds to support future expansion. The company has

existing bonds outstanding that are similar to the new bonds it

expects to issue. The existing bonds have a face value equal to

$$1000,$ have a coupon rate of interest equal to $5\%,$ and mature in $14$

years. These bonds are currently selling for $$1084$ each. Universal

marginal tax rate is $35\%.$ What should be the coupon rate on the new

bond issue? What is the Universal's after$-$tax cost of

debt?