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Rancher Inc. issued twenty-year, 4 percent semiannual coupon bonds at par (par value is $1,000). The bond price is quoted at 92.5% of the par.

Rancher Inc. issued twenty-year, 4 percent semiannual coupon bonds at par (par value is $1,000). The bond price is quoted at 92.5% of the par. What is its pre-tax cost of debt?

2.29 percent

4.58 percent

1.91 percent

3.46 percent

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