Solved: Find the after-tax cost of debt, Finance Basics

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Find the after-tax cost of debt

Question:

Jones, Inc. is trying to determine the cost of debt. The firm has a debt issue outstanding with 18 years to maturity that is quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually. What is the company's pre-tax cost of debt? If the tax rate is 35 percent, what is the after-tax cost of debt?

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Finance Basics: Find the after-tax cost of debt

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