You are asked to estimate after tax cost of debt financing, Financial Management

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You are asked to estimate after tax cost of debt financing

You are asked to estimate after tax cost of debt financing. It can issue 29 years to maturity bonds with a coupon rate of 10.57% paid annually, and par value of $1000. The bonds can be sold now at a price of $1,160 each. Marginal tax rate is 35%. The investment banker will charge $6 per bond in flotation costs. Determine the appropriate after-tax cost of debt.

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Financial Management: You are asked to estimate after tax cost of debt financing

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Financial Management: You are asked to estimate after tax cost of debt financing

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