J&R Renovation, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is quoted at 104 percent of face value. The issue makes semiannual payments and has a coupon rate of 4 percent annually.
What is the company's pretax cost of debt?
Pretax cost of debt %
If the tax rate is 35 percent, what is the aftertax cost of debt?
Aftertax cost of debt %