c.

Which is more relevant, the pretax or the aftertax cost of debt?

• Aftertax cost of debt

• Pretax cost of debt

Jiminy's Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 7 percent 5 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 24 percent. a. What is the pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. 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., 32.16.) Pretax cost of debt b. Aftertax cost of debt