I’m working on a other question and need guidance to help me learn.
Great Seneca Inc. sells $100 million worth of 20-year to maturity 13.12% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $981 for each $1,000 bond. The firm’s marginal tax rate is 40%. What is the after-tax cost of capital for this debt financing?
Round the answer to two decimal places in percentage form.