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Description of Component Cost of Debt

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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, sells at a price of $875, 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?
5.95%
5.63%
6.47%
6.15%
5.31%

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The cost of debt is the YTM on the debt. The YTM is the discounting ...

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