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    Component cost of debt

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    20. Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $950, and the company's tax rate is 40%. What is the component cost of debt for use in the WACC calculation?
    4.81%
    4.49%
    4.31%
    5.48%
    5.30%

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    https://brainmass.com/business/weighted-average-cost-of-capital/component-cost-of-debt-311081

    Solution Preview

    The component cost of debt is the after tax YTM. The YTM is the ...

    Solution Summary

    The solution explains how to calculate the component cost of debt

    $2.19