Question: Tiny Tots has debt outstanding, currently selling for $890 per bond. It matures in 16 years, pays interest annually, and has a 13% coupon rate.

Tiny Tots has debt outstanding, currently selling for

$890

per bond. It matures in

16

years, pays interest annually, and has a

13%

coupon rate. Par is

$1,000,

and the firm's tax rate is

28%.

What is the after-tax cost of debt?

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