Nike is in a 39 percent tax bracket and has a bond outstanding that yields 8 percent to maturity. (show all work)

a. What is Nikes after-tax cost of debt?

b. Assume that the yield on the bond goes down by 1 percentage point, and due to tax reform, the corporate tax rate falls to 20 percent. What is Nikes new after-tax cost of debt?

c. Has the after-tax cost of debt gone up or down from part a to part b? Explain why.