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Calculate before-tax cost of debt

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An investment consortium issues a 15-year bond to finance a safety structure to protect Chapman's Peak Drive from rockfalls. It offers a coupon rate of 8% (units of R1,000) and a discount of 2% to attract overseas investors. Calculate the before-tax cost of debt and the after-tax cost of debt assuming their tax rate is 28% and flotation costs are 1.5%.

Reference no: EM133306506

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