Contrail Air, Inc. is trying to determine its cost of debt. The company has an outstanding debt issue with 18 years to maturity that is quoted at 97.00% percent of face value. The issue makes semiannual payments and has a coupon rate of 8.00% percent. What is the pretax cost of debt?

***The answer is not 8.25%*** Because:(You have incorrectly entered the redemption amount as 95% instead of 100 into your formula. The pretax cost of debt is the YTM of the company's bonds.)

Available options are: 16.53% 9.35% 4.24%