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Carraway Seed Company is issuing a $1 comma 1,000 par value bond that pays 7...

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Accounting

Carraway Seed Company is issuing a $1 comma 1,000 par value bond that pays 7 percent annual interest and matures in 13 years. Investors are willing to pay $945 for the bond. Flotation costs will be 11 percent of market value. The company is in a 38 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?

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