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Lugget Corp. has one bond issue outstanding with an annual coupon of 3.5%, a face value of $1,000 and a price of $1,134.74, which matures
Lugget Corp. has one bond issue outstanding with an annual coupon of 3.5%, a face value of $1,000 and a price of $1,134.74, which matures in 10 years. The company's marginal tax rate is 26%.
Part 1: What is Lugget's pre-tax cost of debt?
Part 2: What is the company's after-tax cost of debt?
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