Answer:
cost of debt 0.0748421 = 7.48%
Explanation:
[tex]\frac{r(1-t)}{(1-f)} = $after tax cost of debt[/tex]
The flotation cost makes the cost increase as we did not receive the whole amount but a diminished portion.
Also, the cost is decrease as are tax deductible making the interest expense to provide a tax shield.
pretax cost of debt =
0.09 x (1 -0.21) / (1 - 0.05) = 0,0748421