Costly Corporation plans a new issue of bonds with a par value of $1000, a maturity of 21 years, and an annual coupon rate of 9.0%. 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 firms similar to Costly is 12.0%. The firm's marginal tax rate is 30%. What will the firm's true cost of debt be for this new bond issue
