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Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 14 years to maturity that is quoted at 105 percent of face value. The issue makes semiannual payments and has an embedded cost (i.e. a coupon rate as an APR) of 7 percent annually

. Required:
What is the company’s pre-tax cost of debt as an APR? (Do not round your

(a) intermediate calculations.)
(Click to select) v

(b)lf the tax rate is 35 percent, what is the after-tax cost of debt as an APR? (Do not round your intermediate calculations.) (Click to select)

v Sixx AM Manufacturing has a target debt-equity ratio of 0.67. Its cost of equity is 18 percent, and its cost of debt is 11 percent. If the tax rate is 33 percent, what is the company’s WACC?

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