What is the company pretax cost of debt

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Reference no: EM132050586

Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is quoted at 110 percent of face value. The issue makes semiannual payments and has an embedded cost of 9 percent annually. Use TVM to solve part (A).

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? (Do not round your intermediate calculations.)

Reference no: EM132050586

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