Jimiax's Cricket Farm issued a 15 year, 4percent semiannual coupon bond 2 years ago. The bond currently sells for 91 percent of its face value. The company's tax rate is 21 percent. What is the company's pretax cost of debt? What is the company's aftertax cost of debt?

Jimiax's Cricket Farm issued a 15 year, 4percent semiannual coupon bond 2 years ago. The bond currently sells for 91 percent of its face value. The company's tax rate is 21 percent. What is the company's pretax cost of debt? What is the company's aftertax cost of debt?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 16P

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Jimiax's Cricket Farm issued a 15 year, 4percent semiannual coupon bond 2 years ago. The bond
currently sells for 91 percent of its face value. The company's tax rate is 21 percent. What is the
company's pretax cost of debt? What is the company's aftertax cost of debt?

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