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You are asked to estimate after tax cost of debt financing. It can issue 29 years to maturity bonds with a coupon rate of 10.57% paid annually, and par value of $1000. The bonds can be sold now at a price of $1,160 each. Marginal tax rate is 35%. The investment banker will charge $6 per bond in flotation costs. Determine the appropriate after-tax cost of debt.

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Financial Management, Finance

Category:- Financial Management
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