Determine its cost of debt

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Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 9 years to maturity that is quoted at 95 percent of face value. The issue makes semiannual payments and has an embedded cost of 11 percent annually. Required: (a) What is the company's pretax cost of debt? (Do not round your intermediate calculations.) (b) If the tax rate is 34 percent, what is the aftertax cost of debt?

Reference no: EM131185764

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