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The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new ​$1,000 par value bonds at a net price of ​$960. The coupon interest rate is

The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new ​$1,000 par value bonds at a net price of ​$960. The coupon interest rate is 15 ​percent, and the bonds would mature in 19 years. If the company is in a 40 percent tax​ bracket, what is the​ after-tax cost of capital to Zephyr for​ bonds?

 

May 05 2021 View more View Less

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