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Question
Dublin International Corporation's marginal tax rate is 40%. It can issue three-year bonds with a coupon rate of 8.5% and par value of $1,000. The bonds can be sold now at a price of $938.90 each. Determine the appropriate after-tax cost of debt for Dublin International to use in a capital budgeting analysis.A) 11.0%
B) 5.2%
C) 6.6%
D) 7.2%
Answer
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