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What is the company pretax cost of debt

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Reference no: EM132844401

One Step, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 26 years to maturity that is quoted at 104 percent of face value. The issue makes semiannual payments and has a coupon rate of 9 percent.

Problem 1: What is the company's pretax cost of debt?

Problem 2: If the tax rate is 22 percent, what is the after-tax cost of debt?

Reference no: EM132844401

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