Question: please show all work for questions 6-8 with easy steps to follow. thank you in advance. Calculating Cost of Debt. ICU Window, Inc., is trying
Calculating Cost of Debt. 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 108 percent of face value. The issue makes semiannual payments and has an embedded cost of 7.4 percent annually. What is ICU's pretax cost of debt? If the tax rate is 38 percent, what is the aftertax cost of debt? Calculating Cost of Debt. Peyton's Colt Farm issued a 30-year, 7 percent semiannual bond 7 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 35 percent. a. What is the pretax cost of debt? b. What is the aftertax cost of debt? c. Which is more relevant, the pretax or the aftertax cost of debt? Why? Calculating Cost of Debt. For the firm in Problem 7, suppose the book value of the debt issue is $90 million. In addition, the company has a second debt issue, a zero coupon bond with 10 years left to maturity; the book value of this issue is 300 million, and it sells for 52.5 percent of par. What is the total book value of debt? The total market value? What is the aftertax cost of debt now
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