Shanken Corp. issued a 20-year, 5.4 percent semiannual bond 3 years ago. The bond currently sells...
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Shanken Corp. issued a 20-year, 5.4 percent semiannual bond 3 years ago. The bond currently sells for 105 percent of its face value. The company's tax rate is 24 percent. |
| a. |
What is the 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. | 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.) |
| c. | Which is more relevant, the pretax or the aftertax cost of debt? |
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