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Calculate the pre-tax cost of debt

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Question - A firm sold a 30-year bond issued two years ago. The bond has a 5.25% annual coupon and a face value of $1,000. If the current market price of the bond is $972.32 and the tax rate is 35%. Calculate the pre-tax cost of debt and the after tax-cost of debt. Which is more relevant to a firm's cost of capital?

Reference no: EM132855767

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