Decline, Inc. is trying to determine its cost of debt. The
firm has a debt issue outstanding with 12 years to maturity
that is quoted at 94 percent of face value. The issue makes
semiannual payments and has an embedded cost of 7
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?

Homework question?

Most definitely Homework. THey didn't take the time to cut and paste their work and their answer too apparently.