Calculating cost of debt. Jimmy's criket farm issued a 30- year , 5% half- early bond seven year ago. The bond currently sells for 98% of its face value . The company's tax rate is 30%
(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 ? Why ?
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