The pretax or the aftertax cost of debt

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Reference no: EM131896736

Shanken Corp. issued a 30-year, 11 percent semiannual bond 7 years ago. The bond currently sells for 105 percent of its face value. The company’s tax rate is 33 percent.

Requirement 1: What is the pretax cost of debt? (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) Pretax cost of debt %_______

Requirement 2: What is the aftertax cost of debt? (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) Aftertax cost of debt %_______

Requirement 3: Which is more relevant, the pretax or the aftertax cost of debt?

Reference no: EM131896736

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