Problem 14-6 Calculating Cost of Debt (LO2] Viserion, Inc., is trying to determine its cost...
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Problem 14-6 Calculating Cost of Debt (LO2] Viserion, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 19 years to maturity that is quoted at 97 percent of face value. The issue makes semiannual payments and has an embedded cost of 7 percent annually. a. What is the company's pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the tax rate is 23 percent, what is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Pretax cost of debt b. Aftertax cost of debt % %
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