Nandos has 2 issues of debt outstanding. First the coupon bond has a 6% with a face value of $35 million, 10 years of maturity, and a yield to maturity of 7%. Annually the coupons are paid. The second bond issue has 15 years of maturity, they are also paid annually, and 7% coupon rate. $40 million is the issue of face value, and the issue sells for 94% of par value. 40% is Nandos firm tax rate
a. What is the before-tax cost of debt?
b. What is the after-tax cost of debt?
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