What is the aftertax cost of debt

Reference no: EM13260987

Ae, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 8 years to maturity that is quoted at 106 percent of face value. The issue makes semiannual payments and has a coupon rate of 8 percent annually.

Required:

What is Advance's pretax cost of debt?

If the tax rate is 34 percent, what is the aftertax cost of debt?

Reference no: EM13260987

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