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Pre-tax cost of debt for the newly-issued bonds

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Reuven Corp. is undergoing a major expansion. The expansion will be financed by issuing new 16-year, $1,000 par, 9% semiannual coupon bonds. The market price of the bonds is $1,090 each. Reuven's flotation expense on the new bonds will be $50 per bond. What is the pre-tax cost of debt for the newly-issued bonds?

Reference no: EM131942263

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