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Waller, Inc., is trying to determine its cost of debt. The firmhas a debt issue outstanding with 12 years to maturity that isquoted at 109 percent of face value. The issue makes semiannualpayments and has an embedded cost of 7 percent annually.What is the company's pretax cost of debt?If the tax rate is 32 percent, what is the aftertax cost ofdebt?
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