Repeat Problem 28 assuming that S&R enhances the bonds by raising the interest rate to 7 percent and discounting the selling price by 10 percent of the face value.

Data from problem 28

S&R Catering is selling bonds to finance a new franchise in Yukon. The total amount of funding is \($500\),000 with each bond having a face value of \($500\) and a 10-year life. The annual bond interest rate is 6 percent with premiums paid annually. The bonds are expected to sell at face value. If S&R’s effective tax rate is 36 percent, determine the effective after-tax cost of the bonds if taxes are paid annually.