timer Asked: Dec 9th, 2013
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Question Description

Jiminy’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.


What is the pretax cost of debt? (Do not round intermediate calculation and round your answer to 2 decimal places. (e.g., 32.16))

 Cost of debt %  


What is the aftertax cost of debt? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

 Cost of debt %  


Which is more relevant, the pretax or the aftertax cost of debt?

Aftertax cost of debt
Pretax cost of debt

Tutor Answer

School: Boston College

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Tutor went the extra mile to help me with this essay. Citations were a bit shaky but I appreciated how well he handled APA styles and how ok he was to change them even though I didnt specify. Got a B+ which is believable and acceptable.

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