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Before-tax cost of debt and after-tax cost of debt Personal Finance Problem David Abbot is interested in purchasing a bond issued by Sony. He has

Before-tax cost of debt and after-tax cost of debtPersonal Finance ProblemDavid Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:

Sony Bond

Par value $1000
Coupon interest rate
5.55.%
Corporate tax rate
20%

Cost
$910

Years to maturity 10

Answer the following questions:

a.Calculate the before-tax cost of the Sony bond using the bond's yield to maturity (YTM).

b.Calculate the after-tax cost of the Sony bond given the corporate tax rate.

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Sony Bond
Par value $1000	Coupon interest rate 5.55.%	Corporate tax rate 20%
Cost $910	Years to maturity 10