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Associating Borrowing Costs. Stephen Security has two financing alternatives- (1) A openly placed $50 million bond issue. Issuance costs are $1 million the bond has a 9% coupon paid semi-annually as well as the bond has a 20-year life. (2) A $50 million private placement with a large pension fund. Issuance costs are $500,000 the bond has a 9.25% annual coupon as well as the bond has a 20-year life. Which alternate has the lower cost annual percentage yield? Show work.

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