Problem 12-6 Calculating Cost of Debt [LO 2] ICU Window Inc. is trying to d

Problem 12-6 Calculating Cost of Debt [LO 2]

ICU Window Inc. is trying to determine its cost of debt. The firm has a debt issue outstanding with seven years to maturity that is
quoted at 114.0 percent of face value. The issue makes semiannual payments and has an embedded cost of 9.8 percent annually.

What is ICU%u2019s pretax cost of debt? (Do not include the percent sign (%). Round your answer to 2 decimal
places (e.g. 32.16).)

If the tax rate is 35 percent what is the aftertax cost of debt? (Do not include the percent sign (%).
Round your answer to 2 decimal places (e.g. 32.16).)