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Determine what is the after-tax cost of debt

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Question 1: Juan's Mirage, Inc. is undergoing a major expansion. They plan to finance this expansion by issuing new 10-year bonds with 6.0% coupon rate. The market price of the bonds is $1,045. Flotation cost on the new bonds will be 1.0% of the market price. Juan's marginal tax rate is 30%. What is the after-tax cost of debt?

Reference no: EM132506128

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