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Ex. 7 asks for pre-tax cost of debt (i.e., yield to maturity YTM), so you must...

Ex. 7 asks for pre-tax cost of debt (i.e., yield to maturity YTM), so you must apply =YIELD(...) Excel function previously learned from Chapter 7.

Calculate Cost of Debt [LO2] Jiminy’s Cricket Farm issued a 30-year, 7 percent semiannual bond 3 years ago. The bond currently sells for 93 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 after tax cost of debt? C. Which is more relevant, the pretax or the after tax cost of debt? Why?

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jeff jeffy answered 8 months ago
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