Jiminyrsquos cricket farm issued a bond with 15 years to, Ask an Expert

Finance

Jiminy’s Cricket Farm issued a bond with 15 years to maturity and a semiannual coupon rate of 10 percent 4 years ago. The bond currently sells for 91 percent of its face value. The company’s tax rate is 35 percent.

a. What is the pretax cost of debt?

b. What is the aftertax costs of debt?

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Financial Management, Finance

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