St thomas company is planning to issue 1000 par value bonds, Operation Management

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St thomas company is planning to issue 1000 par value bonds

St. Thomas Company is planning to issue $1,000 par value bonds. The bonds will have a coupon rate of 9.5 percent and will be sold at a market price of $980. Flotation costs will amount to 4 percent of market value. The bonds will mature in 15 years and coupon payments will be semi-annual. St. Thomas' marginal tax rate is 35%. What is the firm's cost of debt financing?

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Operation Management: St thomas company is planning to issue 1000 par value bonds

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