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Cost of debt with an outstanding debt issue

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Reference no: EM132022702

Determine the cost of debt with an outstanding debt issue and 18 years to maturity that is quoted at 97.00% of face value. Semiannual payments are made and has a coupon rate of 10.00%. What is the pretax cost of debt?

Settlement             01/01/2000

Maturity                 01/01/2018

Price (% of par)                  97  

Coupon rate                      10%

Payments per year              2  

Tax rate                            34%

Reference no: EM132022702

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