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What is the pre tax cost of debt for the newly issued bonds

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Abc corp is undergoing a major expansion. the expansion will be financed by issuing new 12 year $1000 par 9.5% annual coupon bonds. The market price of the bonds is $1125 each. Flotation expense on the new bonds will be $50 per bond. The marginal tax rate is 35%. What is the pre tax cost of debt for the newly issued bonds?

Reference no: EM131933088

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