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What is the posttax cost of new debt

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Problem 1: Lee Airlines plans to issue 12-year bonds with a par value of $1,000 that will pay $70 every six months. The bonds have a market price of $960. Flotation costs on new debt will be 7%. If the firm is in the 35% marginal tax bracket, what is the posttax cost of new debt?

Reference no: EM132761448

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