Question: 1 . IBM has two semiannual debt issues outstanding. Issue One: This bond has $ 2 3 , 0 0 0 , 0 0 0

1. IBM has two semiannual debt issues outstanding. Issue One: This bond has $23,000,000 outstanding. It sells at a 7% discount of its face value and pays a 5% coupon. This debt will mature in 13 years. Issue Two: This was a 30-year bond issued 8 years ago. It has $17,000,000 outstanding and is priced at 104% of its face value. It pays an 11.5% coupon. What is the pre-tax Cost of Debt (RD)?

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