What is the before tax cost of debt

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Reference no: EM13950081

A firm has 20 year $5 million of debt which was acquired 2 years ago and is currently selling at 115% of par value. The debt has a coupon rate of 7% and the current tax rate is 35%. What is the before tax cost of debt?

A. 7.00% B. 5.72% C. 5.65% D. 3.67%

Reference no: EM13950081

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