St thomas company is planning to issue 1000 par value bonds, Ask an Expert

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St. Thomas Company is planning to issue $1,000 par value bonds. The bonds will have a coupon rate of 9.5 percent and will be sold at a market price of $980. Flotation costs will amount to 4 percent of market value. The bonds will mature in 15 years and coupon payments will be semi-annual. St. Thomas' marginal tax rate is 35%. What is the firm's cost of debt financing?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91791449

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