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Madison Square Stores has a $20 million bond issue outstanding that currently has a market value of $18.6 million. The bonds mature in 6.5 years

Madison Square Stores has a $20 million bond issue outstanding that currently has a market value of $18.6 million. The bonds mature in 6.5 years and pay semiannual interest payments of $35 each. What is the firm's pretax cost of debt?

4.21 percent

8.42 percent

7.58 percent

7.74 percent

7.80 percent

Explain how to do it using BAII Plus calculator and formula

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