Share
Explore BrainMass

Component cost of debt

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%

Solution Summary

The solution explains how to calculate the component cost of debt

$2.19