Solved: A company issued a 25 year 68 percent semiannual bond 8, Finance Basics

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A company issued a 25 year 68 percent semiannual bond 8

A company issued a 25 year, 6.8 percent semiannual bond 8 years ago. The bond sells today for 110 percent of its face value. The tax rate is 40%.

What is the pretax cost of debt?
What is the after-tax cost of debt?
Which is more relevant, the pretax or the after-tax cost of debt? Why?

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Finance Basics: A company issued a 25 year 68 percent semiannual bond 8

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Finance Basics: A company issued a 25 year 68 percent semiannual bond 8

Reference No:- TGS02770047

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