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A company has outstanding long-term bonds with a face value of $1,000, a 7% coupon, and a 9% yield to maturity. If the company were

A company has outstanding long-term bonds with a face value of $1,000, a 7% coupon, and a 9% yield to maturity. If the company were to issue new debt, what is a reasonable estimate of the interest rate (r d ) on that debt?

a. 7.0%

b. 9.0%

c. 6.2%

d. 8.0%

e. 5.7%

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