What is the pretax cost of debt-jiminy cricket farm

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Jiminy's Cricket Farm issued a 30 year, 8%, semi-annual bond 3 years ago. The bond currently sells for 93% of its face value. The company's tax rate is 35%. (Hint: Notice that the bonds were issued 3 years ago and be sure to take that into account when calculating years to maturity).

  • What is the pretax cost of debt?
  • What is the after tax cost of debt?

Reference no: EM132420597

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