atyDid Clothes has a $170 million (face value) 20-year bond issue selling for 104 percent of par that carries a coupon rate of 13 percent, paid semiannually. What would be Katydid’s before-tax component cost of debt? (Round your answer to 2 decimal places.)

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Q: KatyDid Clothes has a $130 million (face value) 20-year bond issue selling for 102 percent of par…

A: FV = 130 N  = 40 (20*2) PV = 132.60 (130*102%) Pmt = 6.50 (130*10%/2)

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