An issue of 9.60% senior debentures matures on December 15, 2029 and currently trade at 104.65 Interest is paid semi-annually and December 15 is a coupon anniversary date. [Assume today is December 15, 2020 so term to maturity is 9 years.] The debentures are callable on or at any time thereafter on the dates shown on the schedule below for the prices shown on the schedule. First call is 4 years away. What is the Yield to Maturity of the bonds?

December 15, 2020-2023 2024 2025 2026 2027 2028

Call Price No Call 104% 103% 102% 101% 100.5%

36. What is the issuers breakeven interest rate for refinancing the bonds on December 15, 2024 if the issuer has a tax rate of 35% and the bond was issued at par?

1. 4.34%
2. 5.64%
3. 6.95%
4. 8.67%
5. 13.91%