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Snoopys Fighter Aircraft Production Company wants to calculate its cost of debt. The firm has a debt issue outstanding with 18 years to maturity. It

  1. Snoopys Fighter Aircraft Production Company wants to calculate its cost of debt. The firm has a debt issue outstanding with 18 years to maturity. It is currently quoted at 103% of face value. The issue pays semi-annually at an annual coupon rate of 6%. Par value on each bond is $1,000. What is Snoopys pre-tax cost of debt? If Snoopy pays a 34% tax rate, what is the after-tax cost of debt?

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