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A coupon rate of 9 percent paid annually the tax rate is 40

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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 percent, paid annually. The tax rate is 40 percent. If the flotation cost is 2 percent of the issue proceeds, what is the after-tax cost of debt?

Reference no: EM13483147

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