Jiminy's Cricket Farm issued a 25-year, 5 percent semiannual bond 3 years ago. The bond currently...
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Jiminy's Cricket Farm issued a 25-year, 5 percent semiannual bond 3 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 24 percent. a. What is the pretax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the aftertax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Pretax cost of debt b. Aftertax cost of debt % % c. Which is more relevant, the pretax or the aftertax cost of debt? Aftertax cost of debt Pretax cost of debt Jiminy's Cricket Farm issued a 25-year, 5 percent semiannual bond 3 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 24 percent. a. What is the pretax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the aftertax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Pretax cost of debt b. Aftertax cost of debt % % c. Which is more relevant, the pretax or the aftertax cost of debt? Aftertax cost of debt Pretax cost of debt
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