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The cost of debt   Gronseth Drywall​ Systems, Inc., is in discussions with its investment bankers regarding the issuance...

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Finance

The cost of debt   Gronseth Drywall​ Systems,Inc., is in discussions with its investment bankers regarding theissuance of new bonds. The investment banker has informed the firmthat different maturities will carry different coupon rates andsell at different prices. The firm must choose among severalalternatives. In each​ case, the bonds will have1,000 par value andflotation costs will be $30 per bond. The company is taxed at23​%.

Use the approximation formula to calculate the ​after-taxcost of financing with the following alternative.  ​(Click onthe icon located on the​ top-right corner of the data table belowin order to copy its contents into a​ spreadsheet.)

Coupon rate

Time to maturity

Premium or discount

5%

18

years

$ 250

The​ after-tax cost of financing using the approximation formulais _____.

​(Round to two decimal​ places.)

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