Jiminyrsquos cricket farm issued a 30-year 7 semiannual, Ask an Expert

Finance

Jiminy’s Cricket Farm issued a 30-year, 7% semiannual bond 3 years ago. The bond currently sells for 93% of its face value. The company’s tax rate is 35%. what is the pretax cost of debt? A) What is the aftertax cost of debt? B) Which is more relevant, the pre-tax or the aftertax cost of debt? Why?

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