Use in capital budgeting analysis

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Dublin International Corporation’s marginal tax rate is 40 percent. It can issue 3 year bonds with a coupon rate of 8.5 percent and par value of $1,000.00 The bonds can be sold now at a price of $938.90 each. The underwriters will charge $23 per bond in flotation costs. Determine the appropriate after tax cost of debt for Dublin International to use in a capital budgeting analysis:

Reference no: EM131179702

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