Question
ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is
ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is quoted at 105 percent of face value. The issue makes semiannual payments and has an embedded cost of 5.8 percent annually.
a.What is the company's pretax cost of debt?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimalplaces, e.g., 32.16.)b.If the tax rate is 24 percent, what is the aftertax cost of debt?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimalplaces, e.g., 32.16.)
a. Pretax cost of debt:_______%
b. Aftertax Cost of debt:_______%
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