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Determine the cost of a new bond issue

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Question - Xavier Corporation is estimating its cost of bond financing. It has outstanding a $1,000 face value issue with an 11% coupon and 25 years to maturity. These bonds are currently selling for $1,141.56. Xavier would pay a 5% flotation cost to issue new, similar bonds and pays income taxes at a 21% rate. Determine the cost of a new 25-year bond issue to Xavier Corporation?

Reference no: EM132951029

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