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

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The McKinnon Corporation is considering a new investment, which would be financed from debt. McKinnon 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%. Compute the after-tax cost of capital to McKinnon for bonds, assuming a 34% tax rate. Show all work.

Reference no: EM132402937

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