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Business, 12.08.2020 08:01 reagriffis24

One Step, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 27 years to maturity that is quoted at 105 percent of face value. The issue makes semiannual payments and has a coupon rate of 4 percent. Requried:

a. What is the company's pretax cost of debt?

b. If the tax rate is 23 percent, what is the aftertax cost of debt?

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