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

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Reference no: EM132942668

Problem 1: The Maximus Corporation is considering a new investment, which would be financed from debt. Maximus could sell new $1,000 par value bonds at a new price of $939. The bonds would mature in 15 years, and the coupon interest rate is 9.5%. Compute the after-tax cost of capital to Maximus for bonds, assuming a 34% tax rate.

Reference no: EM132942668

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