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A company has 20,000 bonds outstanding with a coupon rate of 6.5%. Each bond has a par value of $1000 and makes

annual payments. If the bonds have 30 years to maturity and are selling at 101% of par, what is the after tax cost of debt? Assume a tax rate of 30%.

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The formula for the after-tax rate is: the loan... View the full answer

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