Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue...

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Finance

Waller, Inc., is trying to determine its cost of debt. The firmhas a debt issue outstanding with 13 years to maturity that isquoted at 107 percent of face value. The issue makes semiannualpayments and has an embedded cost of 6 percent annually.
(1) What is the company's pretax cost of debt?(Do not round your intermediate calculations.)
a) 6.20%
b) 5.51%
c) 5.46%
d) 4.99%
e) 5.25%
2) If the tax rate is 36 percent, what is the aftertax cost ofdebt? (Do not round your intermediatecalculations.)
a) 2.59%
b) 3.36%
c) 3.53%
d) 3.49%
e) 3.19%

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aInformation provided Face value future value 1000 Time 13 years2 26 semiannual periods Coupon rate 62 3 Coupon payment See Answer

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Waller, Inc., is trying to determine its cost of debt. The firmhas a debt issue outstanding with 13 years to maturity that isquoted at 107 percent of face value. The issue makes semiannualpayments and has an embedded cost of 6 percent annually.(1) What is the company's pretax cost of debt?(Do not round your intermediate calculations.)a) 6.20%b) 5.51%c) 5.46%d) 4.99%e) 5.25%2) If the tax rate is 36 percent, what is the aftertax cost ofdebt? (Do not round your intermediatecalculations.)a) 2.59%b) 3.36%c) 3.53%d) 3.49%e) 3.19%