Jiminys cricket farm issued a 30-year 10 percent semiannual, Ask an Expert

Finance

Jiminy's Cricket Farm issued a 30-year, 10 percent semiannual bond 7 years ago. The bond currently sells for 86.5 percent of its face value. The company’s tax rate is 35 percent.

What is the pretax cost of debt? %?

What is the aftertax cost of debt? %?

Which is more relevant, the pretax or the aftertax cost of debt?

How would you figure this out?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91620889

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