.(Cost of debt) Belton is issuing a $1,000 par value bond that pays 7 percent annual interest and matures in 15…

.(Cost of debt)

Belton is issuing a $1,000 par value bond that pays 7 percent annual interest and matures in 15 years.

Investors are willing to pay $958 for the bond.

Flotation costs will be 11 percent of market value.  

The company is in an 18 percent tax bracket.

 

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