The outstanding debt of Berstin Corp. has ten years to$$ maturity, a current yield of $7\%,$ and a price of $ $85.$ What is the pretax cost of debt if the tax rate is $40\%.$

$$Note: The current yield of a bond is its annual coupon divided by its price. The outstanding debt of Berstin Corp. has ten years to maturity, a current yield of $7\%,$ and a price of $$85.$

What is the pretax cost of debt if the tax rate is $40\%.$

Note: The current yield of a bond is its annual coupon divided by its price.

A$.6\mathrm{.}57\%$

B$.7\%$

C$.4\mathrm{.}92\%$

D$.8\mathrm{.}21\%$

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Part $1$

A$.$

$6\mathrm{.}57\%$

B$.$

$7\%$

C$.$

$4\mathrm{.}92\%$

D$.$