What is the pretax cost of debt-after-tax cost of debt

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Reference no: EM131956484

Advance, 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 105 percent of face value. The issue makes semiannual payments and has a coupon rate of 4 percent.

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. Pretax cost of debt % If the tax rate is 35 percent, what is the after-tax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) It is not 3.81% for before tax and 2.47% for after.I got them wrong.

Reference no: EM131956484

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