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One Step, Inc., is trying to determine its cost of debt. The firm has a debt...

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Finance

One Step, Inc., is trying to determine its cost of debt. Thefirm has a debt issue outstanding with 20 years to maturity that isquoted at 95 percent of face value. The issue makes semiannualpayments and has a coupon rate of 9 percent.

What is the company's pretax cost of debt?

If the tax rate is 21 percent, what is the after tax cost ofdebt?

Answer & Explanation Solved by verified expert
4.2 Ratings (790 Votes)
aCompanys pretax cost of debt The companys pretax cost of debt is the Yield to maturity of YTM of the Bond is calculated using financial calculator as follows Normally the YTM is calculated    See Answer
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