Question: ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with seven years to maturity that is

ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with seven years to maturity that is quoted at 93 percent of face value. The issue makes semiannual payments and has an embedded cost of 5, 6 percent annually. What is ICU’s pretax cost of debt? If the tax rate is 38 percent, what is the after-tax cost of debt?

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