Calculating the cost of debt.

PC, Inc., is trying to determine it's cost of debt. The firm has a debt issue outstanding with 7 years to maturity that is quoted at 87 percent of face value. The issue makes semiannual payments and has an embedded cost of 6.5% annually. What is PC's pretax cost of debt? If the tax rate is 38%, what is the aftertax cost of debt?

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...embedded cost of 6.5% annually. What is PC's pretax cost of debt? If the tax rate is 38%, what is the aftertax cost of debt?

Face value= $870

Years to maturity= 7 years (Periods= 7X 2=14 as ...