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A company wants to sell a 15-year, $1000 par-value bond, that has a coupon rate of...

A company wants to sell a 15-year, $1000 par-value bond, that has a coupon rate of 12%. Because of current market conditions, bond will be sold at a premium of $50. Underwriting costs are 9.5% of par-value and tax-rate is 40%.

The after-tax cost of debt using the approximation formula is

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