To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000.
If the firm's tax rate is 40%, what is the component cost of debt for use in the WACC calculation?
Select one:
a. 5.08%
b. 4.58%
c. 5.33%
d. 4.35%
e. 4.83%
Answers: 1
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