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One Step, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is

One Step, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is quoted at 112 percent of face value. The issue makes semiannual payments and has a coupon rate of 7 percent.

What is the company's pretax cost of debt?

If the tax rate is 25 percent, what is the after-tax cost of debt?

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