J& r renovation, inc., is trying to determine its cost of debt. the firm has a debt issue outstanding with 16 years to maturity that is quoted at 106 percent of face value. the issue makes semiannual payments and has a coupon rate of 6 percent annually. what is the company’s pretax cost of debt?

if the tax rate is 35 percent, what is the aftertax cost of debt?

Mae jong corp. issues $1,000,000 of 10% bonds payable which may be converted into 10,000 shares of $2 par value ordinary shares. the market rate of interest on similar bonds is 12%. interest is payable annually on december 31, and the bonds were issued for total proceeds of $1,000,000. in accounting for these bonds, mae jong corp. will: (a) first assign a value to the equity component, then determine the liability component. (b) assign no value to the equity component since the conversion privilege is not separable from the bond.(c) first assign a value to the liability component based on the face amount of the bond.(d) use the “with-and-without” method to value the compound instrument.