Calculate the required return on investment

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Use the CAPM to calculate the required return on investment.

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Royal Road Company, Inc. wants to increase its debt by selling bonds to $ 900 par value with a coupon interest of 13% to 10 years, in which they will be paying annual interest. To make the sale, a $ 30 bonus will be offered. Costs incurred in this issue (flotation costs) are $ 15 per bond. Use the approximation formula to calculate the cost of debt.

Reference no: EM13943273

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