What is the company pretax cost of debt

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Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 26 years to maturity that is quoted at 95 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually.

a. What is the company's pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b. If the tax rate is 25 percent, what is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.1

Reference no: EM133111837

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