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What is the component cost of debt

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Question - Kenny Electric Company's noncallable bonds were issued several years ago and now have 20 years to maturity. These bonds have 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 25%, what is the component cost of debt for use in the WACC calculation?

a. 5.73%

b. 5.44%

c. 6.03%

d. 6.67%

e. 6.35%

Reference no: EM133119541

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