What is aftertax cost of debt

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Reilly Inc. is trying to determine its cost of debt. The company has a debt issue outstanding with 14 years to maturity that is quoted at 89% of par value. The issue makes semiannual payments and has an embedded cost of 8% annually. What is the pretax cost of debt? If the tax rate is 40%, what is the aftertax cost of debt?

Reference no: EM131893320

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