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VEC Inc. currently has 940000 zero coupon bonds outstanding, each with a face value of $1,000. The bonds have a maturity of 4 years and

VEC Inc. currently has 940000 zero coupon bonds outstanding, each with a face value of $1,000. The bonds have a maturity of 4 years and they are traded in the market at 78% of par. If the tax rate is 20%, what is its after-tax cost of debt capital?

  1. 6.41%
  2. 7.46%
  3. 5.13%
  4. 5.97%

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