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PLEASE DON'T USE EXCEL Shanken Corp. issued a 30-year, 6.2 percent semiannual bond 7 years ago. The bond currently sells for 108 percent of its

PLEASE DON'T USE EXCEL

Shanken Corp. issued a 30-year, 6.2 percent semiannual bond 7 years ago. The bond currently sells for 108 percent of its face value. The companys tax rate is 35 percent. (Assume that the face value of one coupon bond is $1,000.)
1. What is the pretax cost of debt?
2. What is the aftertax cost of debt?
3. Which is more relevant, the pretax or the aftertax cost of debt? Why?

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