Joliet Company is planning to issue $1,000 par value bonds that have a coupon rate of 9.6%.  The bonds will be sold at a market price of $1,120.  Flotation costs will amount to 4 percent of market value.  The bonds would mature in 15 years and coupon payments would be semi-annual.  Joliet's corporate tax rate is 35%.  What is the firm's cost of debt financing?

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