Determine cost of debt-what is the aftertax cost of debt

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ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with ten years to maturity that is quoted at 109.5 percent of face value. The issue makes semiannual payments and has an embedded cost of 8 percent annually.

Requirement 1: What is ICU’s pretax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Pretax cost of debt _______ %

Requirement 2: If the tax rate is 34 percent, what is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Aftertax cost of debt ________%

Reference no: EM131022583

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