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Jiminy's Cricket Farm issued a 30-year, 10.8 percent semiannual bond 5 years ago. The bond currently sells for 84.5 percent of its face value. The
Jiminy's Cricket Farm issued a 30-year, 10.8 percent semiannual bond 5 years ago. The bond currently sells for 84.5 percent of its face value. The companys tax rate is 40 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).) |
Pretax cost of debt | % |
(b) | What is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
Aftertax cost of debt | % |
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