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Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue...

Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 23 years to maturity that is quoted at 97 percent of face value. The issue makes semiannual coupon payments and has a coupon rate of 5 percent annually. What is the company’s pretax cost of debt? If the tax rate is 35 percent, what is the after-tax cost of debt? (Use Excel)

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