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cost of debt

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Company has an outstanding bond issue with a 7-7/8 coupon, market price of 103-5/8 (percent of 100% par, in 32nds.), semiannual coupon payments, and 12 years to maturity.

What is the YTM of this? Please show calculations.

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Solution Summary

YTM and cost of debt are determined in the solution.

$2.19