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Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years to maturity and a 7.00% annual coupon

Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925, and the companys tax rate is 40%. What is the component cost of debt for use in the WACC calculation?

1. 4.28%

2. 4.46%

3. 4.65%

4. 4.83%

5. 5.03%

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