Pearce's Cricket Farm issued a 30-year, 8% semiannual bond 5 years ago. The bond currently sells for
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Question:
Pearce's Cricket Farm issued a 30-year, 8% semiannual bond 5 years ago. The bond currently sells for 93% of its face value. The company's tax rate is 25%.Assume the par value of the bond is $1,000.
What is the pre-tax cost of debt?(Do not round intermediate calculations. Round the final answer to 3 decimal places.)
What is the after-tax cost of debt?(Do not round intermediate calculations. Round the final answer to 3 decimal places.)
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