You Go Slow, Inc., is trying to determine its cost of debt. The firm has a debt

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You Go Slow, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with seven years to maturity that is quoted at 85 percent of face value. The issue makes semiannual payments and has an embedded cost of 5.5 percent annually. What is You Go’s pretax cost of debt? If the tax rate is 38 percent, what is the aftertax cost of debt?

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Fundamentals Of Corporate Finance

ISBN: 9780072313000

5th Edition

Authors: Stephen A Ross, Randolph W Westerfield

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