Shanken corp issued a 30 yr 7 semiannual bond 7 years ago, Ask an Expert

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Shanken Corp issued a 30 yr, 7% semiannual bond 7 years ago. Bond currently sells for 108 percent of its face value. Company's tax rate is 35%.

a. What is the pretax cost of debt?
b. What is the after tax cost of debt?
c. Which is more relevant and why?

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