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Finance Question, please help? |
Juan's Mirage, Inc. is undergoing a major expansion. They plan to finance this expansion by issuing new 10-year, $1,000 par, 6% annual coupon bonds. The market price of the bonds is $1,045 each. Juan's flotation expense on the new bonds will be $10 per bond. Juan's marginal tax rate is 30%. What is the pre-tax cost of debt for the newly-issued bonds? You are taking a significant risk when you post homework questions here, as you have no idea whether anyone who answers is academically gifted or not (i.e. a person can be very successful in world of investing but still not be able to answer finance or economics questions correctly). Not to mention the fact that you have a teacher, classmates, and textbook that are more familiar with material you are studying and would be better qualified to help you arrive at correct answer. |
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