Question: Question 2 [2 points) E Costly Corporation plans a new issue of bonds with a par value of $1000, a maturity of 39 years. and

Question 2 [2 points) E Costly Corporation plans a new issue of bonds with a par value of $1000, a maturity of 39 years. and an annual coupon rate of 15.0%. Flotation costs associated with a new debt issue would equal 7.0% of the market value of the bonds. Currently. the appropriate discount rate for bonds of rms similar to Costly is 19.0%. The rm's marginal tax rate is 40%. What will the rm's true cost of debt be for this new bond issue? 22.94% 20.43% 16.14% 9.68% 12.26% Save

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