1. Tony Stark has incurred some debt and he would like for you to figure out what the cost of this debt is. With the information given below, what would be his cost?

Tony Stark sold a $1,000 par value, non-callable bond that now has 15 years to maturity and an 8.50% annual coupon that is paid semiannually. The bond that his has sells for $1,025 and his tax rate is 35%.

Figure out the cost of debt so that Tony Stark can calculate his WACC.

(Hint: you are trying to solve the cost (interest rate) amount, which is at a semi-annual amount, then covert this amount into a yearly amount, and then take into consideration the after-tax effect this will give you your final answer).