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Calculating Cost of Debt Advance, Inc., is trying to determine its cost of debt. The...

Calculating Cost of Debt Advance, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 17 years to maturity that is quoted at 95 percent of face value. The issue makes semiannual payments and has a coupon rate of 8 percent annually. What is Advance’s pretax cost of debt? If the tax rate is 35 percent, what is the after tax cost of debt?

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