Component cost of debt for use in wacc calculation

Reference no: EM131562810

Cummins Company’s non-callable bonds were issued several years ago and now have 16 years to maturity. These bonds have a 7% 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?

Reference no: EM131562810

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