Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 26 years to maturity that is quoted at 104 percent of face value. The issue makes semiannual payments and has an embedded cost of 9 percent annually. a. What is the company's pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the tax rate is 22 percent, what is the aftertax cost of debt? (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 % %
Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 26 years to maturity that is quoted at 104 percent of face value. The issue makes semiannual payments and has an embedded cost of 9 percent annually. a. What is the company's pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the tax rate is 22 percent, what is the aftertax cost of debt? (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 % %
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 17P
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