Problem:
Shaken Corp. issued a bond with a maturity of 15 ears and a semiannual coupon rate of 8 percent 3 years ago. The bond currently sells for 96 percent of its face value. The company's tax rate is 35%.
Required:
Question 1: What is the pretax cost of debt?
Question 2: What is the after-tax cost of debt?
Note: Please answer in proper manner and show all computations