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What is the pretax cost of debt

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Reference no: EM133017928

Question - Suspect Corp. issued a bond with a maturity of 20 years and a semiannual coupon rate of 10 percent 2 years ago. The bond currently sells for 93 percent of its face value. The company's tax rate is 35 percent.

Required -

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?

Reference no: EM133017928

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