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question archive A Corporation is considering issuing long-term debt

A Corporation is considering issuing long-term debt

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A Corporation is considering issuing long-term debt. The debt would have a 30-year maturity and a 13 percent coupon rate. In order to sell the issue, the bonds must be underpriced at a discount of 6 percent of face value. In addition, the firm would have to pay flotation costs of 6 percent of face value. The firms tax rate is 34 percent. Given this information the after tax cost of debt would be?

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