Solved: Determining the the cost of debt for j-b inc, Finance Basics

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Determining the the cost of debt for j-b inc

Question:

J & B Inc. has $5 million of new debt to finance a project with a coupon rate of 12%, paid semiannually and has a par value of $1,000. The bonds will mature in 14 years and are priced at $850, net of flotation costs. If the firm's tax rate is 40%, what is the the cost of debt to J & B (Round to the nearest whole percentage).

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Finance Basics: Determining the the cost of debt for j-b inc

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