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A company is going to issue a $1,000 par value bond that pays a 7% annual coupon.The company expects investors to pay $942 for the 20-year bond.The expected flotation cost per bond is $42,and the firm is in the 34% tax bracket.Compute the following:
a.The yield to maturity on the firm's bonds
b.The firm's after-tax cost of existing debt
c.The firm's after-tax cost of new debt
Normative Expectations
The beliefs or standards considered normal within a specific culture or group, guiding behavior and influencing conformity.
Social Desirability
The tendency of respondents to answer questions in a manner that will be viewed favorably by others, often skewing survey or research results.
Commonality
A shared feature, trait, or belief among two or more entities.
Confirmation Bias
The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.
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