Umbrella INC. is trying to determine its cost of debt. The firm has a debt...
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| Umbrella INC. is trying to determine its cost of debt. The firm has a debt issue outstanding with 9 years to maturity that is quoted at 99% of face value. The issue makes semiannual payments and has an embedded cost of 12% annually. |
| Required: |
| (a) | What is the company's pretax cost of debt? (Do not round) |
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| A. 11.58% B. 12.80% C. 12.20% D. 12.19% E. 12.67% |
| (b) | If the tax rate is 36%, what is the aftertax cost of debt? (Do not round) |
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