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Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 27 years to maturity that is quoted

Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 27 years to maturity that is quoted at 96 percent of face value. The issue makes semiannual payments and has an embedded cost of 7 percent annually.

a. What is the companys pretax cost of debt?
b. If the tax rate is 21 percent, what is the aftertax cost of debt?

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