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Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 19 years to maturity that is quoted

Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 19 years to maturity that is quoted at 94 percent of face value. The issue makes semiannual payments and has an embedded cost of 8 percent annually.
a.

What is the company's pretax cost of debt?
b.

If the tax rate is 25 percent, what is the aftertax cost of debt?

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