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Business, 06.05.2020 02:45 123niikee

Jiminy's Cricket Farm issued a 30-year, 7.8 percent semiannual bond 5 years ago. The bond currently sells for 92 percent of its face value. The company’s tax rate is 40 percent. Required: (a) What is the pretax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e. g., 32.16).) Pretax cost of debt % (b) What is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e. g., 32.16).) Aftertax cost of debt % (c) Which is more relevant, the pretax or the aftertax cost of debt?

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Jiminy's Cricket Farm issued a 30-year, 7.8 percent semiannual bond 5 years ago. The bond currently...
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