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Which is more relevant the pretax or the after-tax cost of

Input Area

Settlement 01/01/00

Maturity 01/01/17

Price (% of par) 110

Coupon rate 6.80%

Payments per year 2

Tax rate 40%

Output Area:

a. Pretax cost of debt

b. Aftertax cost of debt

c. Which is more relevant, the pretax or the after-tax cost of debt and why?

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Finance Basics: Which is more relevant the pretax or the after-tax cost of

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