Before and after tax cost of debt

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Reference no: EM1334177

Assume that Dell issued 30-year bonds, 8% coupon rate, semiannual, 7 years ago. The bond currently sells for 108% of face value. The company's tax rate is 35%.

1. What is the pretax cost of debt?
2. What is the after-tax cost of debt?
3. Which is more important and why?

Reference no: EM1334177

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