# Component cost of debt

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%

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

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

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The solution explains how to calculate the component cost of debt

$2.19