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Waller, Inc., is trying to determine its cost of debt. The firmhas a debt issue outstanding with 14 years to maturity that isquoted at 96 percent of face value. The issue makes semiannualpayments and has an embedded cost of 9 percent annually. Required:(a) What is the company's pretax cost of debt? (Do not round yourintermediate calculations.) (b) If the tax rate is 34 percent, whatis the aftertax cost of debt? (Do not round your intermediatecalculations.)
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