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What is the component cost of debt

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Reference no: EM132755768

Problem 1: 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, quoted at 107.500, and has a par value of $1,000. What is the component cost of debt (before tax) for use in the WACC calculation?

Select one:

a. 9.25%
b. 4.23%
c. 5.83%
d. 8.47%

Reference no: EM132755768

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