Solution-Pretax cost of debt-suspect corp

Pretax cost of debt-suspect corp

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Reference no: EM132724501

Suspect Corp. issued a bond with a maturity of 30 years and a semiannual coupon rate of 6 percent 4 years ago. The bond currently sells for 95 percent of its face value. The company's tax rate is 35 percent.

a. What is the pretax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Pretax cost of debt %

b. What is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Aftertax cost of debt %

c. Which is more relevant, the pretax or the aftertax cost of debt?

Multiple choice

-Aftertax cost of debt

-Pretax cost of debt

Reference no: EM132724501

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Pretax cost of debt-suspect corp

Reference no: EM132724501

Reference no: EM132724501

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