Posted on by Judy

Walker Inc Is Trying To Determine Its Cost Of Debt The Firm Has A Debt Issue Out

Walker Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 15 years to maturity that is quoted at 107% of face value. The issue makes semi-annual payments and has an embedded cost of 7% annually. What is the company’s pretax cost of debt? Part 2) If the tax rate is 35%, what is the aftertax cost of debt?
 
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