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What is the pretax cost of debt

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Reference no: EM132396582

Fanny's Farm issued a 25-year, 6 percent semiannual bond four years ago. The bond currently sells for 102 percent of its face value. The company's tax rate is 21 percent.

a. What is the pretax cost of debt?

b. What is the after-tax cost of debt?

c. Which is more relevant, the pretax or the after-tax cost of debt? Why?

Reference no: EM132396582

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