Compute the cost for the sources of financing

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Compute the cost for the following sources of financing:

a. A $ 1,000 par value bond with a market price of $ 965 and a coupon interest rate of 6 percent. Flotation costs for a new issue would be approximately 8 percent. The bonds mature in 5 years and the corporate tax rate is 35 percent. What is the firms after-tax cost of debt on the bond _______% ?

Reference no: EM131444279

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