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Practice Test 4 (Ch 14-15) Saved 13 Problem 14-7 Calculating Cost of Debt (LO2] 1 points Jiminy's Cricket Farm issued a bond with 25 years

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Practice Test 4 (Ch 14-15) Saved 13 Problem 14-7 Calculating Cost of Debt (LO2] 1 points Jiminy's Cricket Farm issued a bond with 25 years to maturity and a semiannual coupon rate of 6 percent 5 years ago. The bond currently sells for 108 percent of its face value. The company's tax rate is 24 percent. Skipped eBook a. What is the pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Hint References a. Pretax cost of debt Aftertax cost of debt % b. % c. Which is more relevant, the prelax or the aftertax cost of debt? Aftertax cost of debt Pretax cost of debt

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