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Calculate the ?after-tax cost of financing with alternative

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Reference no: EM132515825

Gronseth Drywall? Systems, Inc., is in discussions with its investment bankers regarding the issuance of new bonds. The investment banker has informed the firm that different maturities will carry different coupon rates and sell at different prices. The firm must choose among several alternatives. In each? case, the bonds will have a ?$1,000 par value and flotation costs will be ?$30 per bond. The company is taxed at 22?%.

Question 1: Calculate the ?after-tax cost of financing with the following alternative

Coupon Rate 10%

Time to Maturity 13 years

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Reference no: EM132515825

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