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Cost of debt 3. Wind Power Systems has 20-year, semi-annual bonds outstanding with a 5 percent coupon. The face amount of each bond is $1,000.
Cost of debt
3. Wind Power Systems has 20-year, semi-annual bonds outstanding with a 5 percent coupon. The face amount of each bond is $1,000. These bonds are currently selling for 114 percent of face value. Assume tax rate is 35 percent. a. What is the company's pre-tax cost of debt?
(3.98%)
b. What is the companys after-tax cost of debt? (2.59%)
The answers are provided to both A and B in parenthesis, i just need to show my work as to how i got that answer
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