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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

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 6.0% Corporate tax rate 35%

Cost$920 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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