I have a test tomorrow and I expect there will be a similar problem like this, I need to learn how to use the calculator asap…

Waller, Inc is trying to determine its cost of debt. The firm has a debt issue outstanding with 9 years to maturity that is quoted at 107% of face value. The issue makes semiannual payments and has an embedded cost of 9% annually.

a) what is the company’s pretax cost of debt? (answer is R=3.949% YTM=2×3.949= 7.9%)

b) If the tax rate is 32%, what is the aftertax cost of debt? (answer is Rd = .079(1-.32) = 5.37%)

(i dont think you would have to explain part b, but once you explain how to punch part a in the calculator b should be self explanitory)

thank you answer community!

waller inc is trying to determine its cost of debt how do you use a finance calculator to solve this problem ? i have a test tomorrow and i expect there will be a similar problem like this i need to learn how to use the calculator asap waller inc is trying to determine its cost of debt the firm has a debt
 

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