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Sunrise, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 23 years to maturity that is quoted
Sunrise, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 23 years to maturity that is quoted at 96 percent of face value. The issue makes semiannual payments and has an embedded cost of 5 percent annually. What is the company's pretax cost of debt? If the tax rate is 21 percent, what is the aftertax cost of debt? Input Area: Settlement 1/1/2020 Maturity 1/1/2043 Price (% of par) 96 Redemption (% of par) 100 Coupon rate 5% Payments per year 2 Tax rate 21% (Use cells A6 to B12 from the given information to complete this question. You must use the built-in Excel function to answer this question. Leave the "Basis" input blank in the function.) Output Area: Pretax cost of debt Aftertax cost of debt
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