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The new bonds will be issued for 8 the corporations tax

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Reference no: EM13572190

Buchanan Corp. is refunding $12 million worth of 10% debt. The new bonds will be issued for 8%. The corporation's tax rate is 35%. The call premium is 9%. What is the net cost of the call premium?

a) $390,000
b) $1,080,000
c) $702,000

Reference no: EM13572190

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