Cost of Bonds. XYZ Company has bonds outstanding with 7 years left before maturity. The bonds are currently selling for $800 per $1,000 face value. The interest is paid annually at a rate of 12...

Cost of Bonds. XYZ Company has bonds outstanding with 7 years left before maturity. The bonds are currently selling for $800 per $1,000 face value. The interest is paid annually at a rate of 12 percent. The firm’s tax rate is 40 percent. Calculate the after-tax cost of debt using (a) the regular method, and (b) the shortcut method.