The Cost of Debt and Flotation Costs. Suppose a company will issue new 25 -year...
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The Cost of Debt and Flotation Costs. Suppose a company will issue new 25 -year debt with a par value of $1,000 and a coupon rate of 9%, paid annually. The issue price will be $1,000. The tax rate is 25%. If the flotation cost is 3% of the issue proceeds, then what is the aftertax cost of debt? Round your answer to two decimal places. % What if the flotation costs were 12% of the bond issue? Round your answer to two decimal places. %
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