Question $11$

$1$ pts

To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has $20$ years to maturity. This bond has a $9\mathrm{.}25\%$ annual coupon, paid semiannually, sells at a price of $$850,$ and has a par value of $$1,000.$ If the firm's tax rate is $40\%,$ what is the component cost of debt for use in the WACC calculation?

$7\mathrm{.}22\%$

$5\mathrm{.}95\%$

$6\mathrm{.}68\%$

$5\mathrm{.}08\%$

$8\mathrm{.}22\%$