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What is the cost of debt

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Reference no: EM133121450

Assume that a firm has an outstanding 30-year semi-annual coupon bond with a face value of $1,000 and an annual coupon rate of 14%. The bond is selling at par. If the company issues new bonds, a flotation cost of 5% would be incurred. The firm's combined marginal federal and state tax rate is 40%. What is the cost of debt?

Reference no: EM133121450

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