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Compute the after-tax cost of capital to dayton for bonds

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Reference no: EM132488324

Point 1: The Dayton Corporation is considering a new investment, which would be financed from debt. Dayton could sell new $1k par value bonds at a new price of $950. The bonds would mature in 15 years, and the coupon interest rate is 10%.

Question 1: Compute the after-tax cost of capital to Dayton for bonds, assuming a 34% tax rate. Show work.

Reference no: EM132488324

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