Question: 1) A bond that has $1,000 par value (face value) and contract or coupon interest rate of 9 percent. A new issue would have a

1) A bond that has $1,000 par value (face value) and contract or coupon interest rate of 9 percent. A new issue would have a flotation cost of 5 percent of the $1,100 market value. The bonds mature in 10 years. The firm's marginal tax rate is 21 percent.

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