Debt Cost of Capital for Debt with Maturity Greater than One Year: Assume the company issues debt with the following characteristics:

Face value of debt $($in millions$)$ Coupon interest rate $($paid annually$).$ Years to maturity Issue price

Recovery rate $($all years$)$

$$100$

$12\%$

$5$

$$75$

$40\%$

$30\%$

$25\%$

$20\%$

$15\%$

$10\%$

Probability of default$-$Year $1$

Probability of default$-$Year $2.$

Probability of default$-$Year $3.$

Probability of default$-$Year $4.$

Probability of default$-$Year $5.$

Calculate the yield to maturity, the cost of debt, and the expected default loss for this debt issue.