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problem: Stephens Security has two financing options: (A) A publicly placed $50 million bond issue. Issuance costs are $1 million, the bond has a 9 percent coupon paid semiannually, and the bond has a 20 year life. [B] A $50 million private placement with a large pension fund. Issuance costs are $500,000, the bond has a 9.25% yearly coupon, and the bond has a twenty year life. Which option has the lower cost [annual percentage yield]?

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