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Bron Co . sold a $ 1 , 0 0 0 par value, noncallable bond that now has 2 0 years to maturity and a

Bron Co

.

sold a $

1, 000

par value, noncallable bond that now has

20

years to maturity and a

7.00 %

annual coupon that is paid semiannually. The bond currently sells for $

875,

and the company

s tax rate is

40 % .

What is the component cost of debt for use in the WACC calculation?

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