Question
The Lincoln Company sold a $1,000 par value, noncallable bond several years ago that now has 20 years to maturity and a 7.00% annual coupon
The Lincoln Company sold a $1,000 par value, noncallable bond several years ago 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 company's tax rate is 30%. What is the component cost of debt for use in the WACC calculation?
| a. | 4.28% | |
| b. | 5.42% | |
| c. | 4.46% | |
| d. | 7.74% | |
| e. | 4.65% |
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
5th edition
1111527369, 978-1111527365
