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What is the after-tax cost of debt

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Question - Cost of Debt

Q1. Peyton's Colt Farm issued a 30-year, 7 percent semiannual bond 7 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 35 percent. What is the before-tax cost of debt? What is the after-tax cost of debt?

Q2. A company's 6% coupon rate, semiannual payment, $1,000 par value bond that matures in 30 years sells at a price of $915.16. The tax rate is 40%. What is the before-tax cost of debt? What is the after-tax cost of debt?

Reference no: EM132846425

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