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Mathematics, 26.01.2021 20:10 asialovepink2321

Pearce’s Cricket Farm issued a 30-year, 8 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. Assume the par value of the bond is $1,000. a. What is the pre-tax cost of debt? b. What is the after-tax cost of debt? c. Which is more relevant, the pre-tax or the after-tax cost of debt?

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