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Flotation costs for a new issue

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Reference no: EM132419889

Netflix has a $10 million debt issue outstanding, with a 6% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 95% of par value. Flotation costs for a new issue would be approximately 3 percent of the current price. If Netflix faces a 40% tax rate, what is its after-tax cost of debt?

Reference no: EM132419889

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