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Component Cost of Debt for Use in WACC Calculation

Question

Several years ago your company sold a $1,000 par value, non-callable bonds that now has 12 years to maturity and a 8.00% annual coupon that is paid semiannually. The bond currently sells for $925, and the company’s tax rate is 40%. What is the component cost of debt for use in the WACC calculation?

Summary

This question belongs to finance and discusses about calculating component cost of debt.

Word count: NA

 

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    Giuseppe

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