Marginal after-tax cost of debt for scherr

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Scherr Enterprises has a series of 8 percent coupon bonds outstanding with a$1,000 par value. The bonds mature in 10 years and currently sell for $946. If new bonds are issued, the issuance cost is expected to be $11 per bond. Scherr's marginal tax rate is 40 percent. What is the marginal after-tax cost of debt for Scherr? (Assume annual interest payments.)

Reference no: EM131017891

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