Firm after-tax cost of debt on bond-carraway seed company

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Carraway Seed Company is issuing a ?$1,000 par value bond that pays 8 percent annual interest and matures in 5 years. Investors are willing to pay ?$975 for the bond. Flotation costs will be 14 percent of market value. The company is in a 25 percent tax bracket. What will be the? firm's after-tax cost of debt on the? bond?

Reference no: EM132645142

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