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(Cost of debt) Carraway Company is suing a $1,000 par value bonds that pays 7...

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Accounting

(Cost of debt) Carraway Company is suing a $1,000 par value bonds that pays 7 percent annual interest and matures in 9 years. Investors are willing to pay $965 for the bond. Flotation costs will be 13 percemy of the market value. The company is in a 40 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?

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