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A firm recently issued $1,000 par value, 15-year bonds with a coupon rate of 7

Finance

A firm recently issued $1,000 par value, 15-year bonds with a coupon rate of 7.5%. Coupon interest payments will be paid semi-annually. The bonds sold at par value, but the firm paid flotation costs amounting to 5% of par value. The firm has a marginal tax rate of 34%. What is the firm's after-tax cost of debt for these bonds?

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