Waller, Inc., is trying to determine its cost of debt. The firm has a debt...
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Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 9 percent annually.
| (a) What is the company's pretax cost of debt?
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| (b) | If the tax rate is 37 percent, what is the aftertax cost of debt? |
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