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Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is
Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is quoted at 107.5 percent of face value. The issue makes semiannual payments and has an embedded cost of 6.8 percent annually. a. What is the company's pretax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. If the tax rate is 25 percent, what is the aftertax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Pretax cost of debt b. Aftertax cost fo debt % %
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