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Jiminy's Cricket Farm issued a 30-year, 10.4 percent semiannual bond 9 years ago. The bond currently sells for 85.5 percent of its face value. The
Jiminy's Cricket Farm issued a 30-year, 10.4 percent semiannual bond 9 years ago. The bond currently sells for 85.5 percent of its face value. The companys tax rate is 30 percent.
(a) What is the pretax cost of debt?
(b) What is the aftertax cost of debt?
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