Explore BrainMass
Share

Explore BrainMass

    Component cost of debt

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    14. 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 $850, 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?
    7.22%
    5.95%
    6.68%
    5.08%
    8.22%

    © BrainMass Inc. brainmass.com October 10, 2019, 12:52 am ad1c9bdddf
    https://brainmass.com/business/weighted-average-cost-of-capital/component-cost-of-debt-311076

    Solution Summary

    The solution explains how to calculate the component cost of debt

    $2.19