What is the company pretax cost of debt

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Reference no: EM131069094

Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is quoted at 105 percent of face value. The issue makes semiannual payments and has an embedded cost of 10 percent annually.

(a) What is the company's pretax cost of debt?

(b) If the tax rate is 33 percent, what is the aftertax cost of debt?

Reference no: EM131069094

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