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I tried this twice and it is still wrong! Please help! Jiminy's Cricket Farm issued a 30-year, 9 percent semiannual bond 7 years ago. The
I tried this twice and it is still wrong! Please help!
Jiminy's Cricket Farm issued a 30-year, 9 percent semiannual bond 7 years ago. The bond currently sells for 89 percent of its face value. The company's tax rate is 35 percent. Required: (a) What is the pretax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) 3.5 % (b) What is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer asa percentage rounded to 2 decimal places (e.g., 32.16).) Aftertax cost of debt 3.2 996 3.2 % (c) Which is more relevant, the pretax or the aftertax cost of debt? Aftertax cost of debtStep by Step Solution
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