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Gibson Industries Is Issuing a $1,000 Par Value Bond with an 8

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Gibson Industries is issuing a $1,000 par value bond with an 8% annual interest coupon rate that matures in 11 years.Investors are willing to pay $972,and flotation costs will be 9%.Gibson is in the 34% tax bracket.What will be the after-tax cost of new debt for the bond?


Definitions:

Reasonable Reliance

The dependence by one party on the representations or promises of another where such reliance is logically or legally justifiable.

Material Fact

Information that is significant enough to influence a decision, especially pertinent in contract and disclosure laws.

Utah Law

Law specific to the state of Utah, governed by state legislation and legal precedents within Utah jurisdiction.

Public Record

Documents or pieces of information that are not considered confidential and are kept by government agencies, available for public access and inspection.

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