Jiminy's Cricket Farm issued a 20-year, 7 percent semiannual coupon bond 5 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 24 percent. 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. What is the company's 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 of debt % %
Jiminy's Cricket Farm issued a 20-year, 7 percent semiannual coupon bond 5 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 24 percent. 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. What is the company's 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 of debt % %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Jiminy's Cricket Farm issued a 20-year, 7 percent semiannual coupon bond 5 years ago. The bond currently sells for 94 percent of its
face value. The company's tax rate is 24 percent.
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. What is the company's 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 of debt
%
%
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