If the tax rate is 35 percent what is the aftertax cost of


J&R Renovation, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is quoted at 104 percent of face value. The issue makes semiannual payments and has a coupon rate of 4 percent annually.

What is the company's pretax cost of debt?

Pretax cost of debt             %

If the tax rate is 35 percent, what is the aftertax cost of debt?

Aftertax cost of debt             %

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Financial Management: If the tax rate is 35 percent what is the aftertax cost of
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