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Suppose a company will issue new 20-year debt with a par value of $1,000 and a coupon rate of 9%, paid annually.

The tax rate is 35%. If the flotation cost is 5% of the issue proceeds, then what is the after-tax cost of debt?

Disregard the tax shield from the amortization of flotation costs. Round your answer to two decimal places.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92842202

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