Shaken Corp issued a 20-year, 8 percent semiannual bond 3 years ago The bond currently sells for 96 percent of its face value The company's tax rate is 35 percent.
1. What is the pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
2. What is the after-tax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
3. Which is more relevant, the pretax or the after-tax cost of debt?