A company sold a bond with 15 years to maturity. This bond has an 10% annual coupon, paid semiannually, it sells at a price of $1,080, and it has a par value of $1,000. if the corporate tax rate is 21%, what component cost of debt should be used in the WACC calculation?

a.5.86%

b.6.55%

c.8.26%

d.7.13%

YTM = C + [ (Par Value - Bond Price) / Maturity Years] / [(Par Value + Bond Price)/2]

YTM=pre-tax

after tax cost=YTM(1-x)