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Jiminys Cricket Farm issued a bond with 10 years to maturity and a semiannual coupon rate of 10 percent 4 years ago. The bond currently

Jiminys Cricket Farm issued a bond with 10 years to maturity and a semiannual coupon rate of 10 percent 4 years ago. The bond currently sells for 94 percent of its face value. The companys tax rate is 35 percent.

a) What is the pretax cost of debt?

b) What is the aftertax cost of debt?

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