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Firm after-tax cost of debt on the bond

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Reference no: EM132238990

Tea-Time Travel wishes to offer a $1,000 bond that pays 8% annual interest and matures in 15 years. Using information provided, what will be the firm's after-tax cost of debt on the bond?

  • Investors are willing to pay $950 for the bond.
  • Flotation costs will be 11% of market value.
  • The company is in a 19% tax bracket.

Reference no: EM132238990

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