What is the companys pretax cost of debt

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Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 14 years to maturity that is quoted at 104 percent of face value. The issue makes semiannual payments and has an embedded cost of 8 percent annually.

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

b. If the tax rate is 35 percent, what is the aftertax cost of debt?

Reference no: EM131013802

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