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The underwriters will charge 23 per bond in flatation costs

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Corporations marginal tax rate is 40%. It can issue 3-year bonds witha coupon rate of 8.5% and par value of $1000. The bonds can be sold now at a price of $938.90 each.The underwriters will charge $23 per bond in flatation costs. Determine the appropraite after tax cost of debt for corp to use in a capital budgeting analysis.

Reference no: EM13482711

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