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Sunny, Corp., issued bonds with a par value of $1,000 and 5.5% coupon rate, 20 years left to maturity, and the price of these bonds

Sunny, Corp., issued bonds with a par value of $1,000 and 5.5% coupon rate, 20 years left to maturity, and the price of these bonds is selling at $1,120. The companys tax rate is 25 percent.

(1) What is the pre-tax cost of debt of the company?

(2) What is the after-tax cost of debt of the company?

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