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Seven years ago ABC Inc. issued a series of $1,000 bonds (i.e. Par = $1,000) @ 10% compounded semiannually for a term of 30 years. Additionally, the bonds are callable with a call premium of two coupon payments. Today, the market rate is 10% and each single bond is trading for $844.76. If ABC Inc. wants to raise new debt today, what would be ABC's marginal cost of debt? Assume no significant change in ABC's bond rating.

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