Pearce’s Cricket Farm issued a 30-year, 8% semiannual bond 3 years ago. The bond currently sells...

Pearce’s Cricket Farm issued a 30-year, 8% semiannual bond 3 years ago. The bond currently sells for 95% of its face value. The company’s tax rate is 35%. Assume the par value of the bond is $1,000.

a. What is the pre-tax cost of debt? (Do not round intermediate calculations. Round the final answer to 3 decimal places.)

Pre-tax cost of debt %

b. What is the after-tax cost of debt? (Do not round intermediate calculations. Round the final answer to 3 decimal places.)

After-tax cost of debt %

Expert Solution

jeff jeffy answered 2 years ago

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