You realize that there are tax advantages to funding your company using debt instead of...
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Accounting
You realize that there are tax advantages to funding your company using debt instead of equity. After understaning the company's investment needs, you have issued the following bonds: Annual coupon rate of 7.4%, paid semiannually. Remaining time to maturity of 13 years. Current price of $1,090. Face value is $1,000. 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., 12.34.) b. If the tax rate is 24%, 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., 12.34.) a. Pretax cost of debt b. Aftertax cost fo debt % %
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