Bond of $ 1000 par value issued at $996 . Coupon rate 3.8% ,coupon paid at the end of every year. Bond will be repaid at $ 1002 i.e. $ 2 on redemption of the bond. Bond will mature after 5 years. The corporate tax rate is 30%. Calculate cost of bond.

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Q: e present value of

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A: Answer:

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A: Solution is given below.

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