Finance Chapter 3 Bond calculations

Question 14/26

Street Wear is a United States clothing company located in North Dakota. Currently the business has an outstanding bond of $980. The bond in question has a 4% semi-annual coupon and 10 years to maturity. What if Street Wear was planning to fund a new project with 40% debt. Which one of the following answer is Street Wears before-tax annual cost of borrowing?

A) 2.12%

B)4.24%

C)2%

D)4%