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WACC for a company. Cost of Debt (part question) The 9% coupon bonds (semiannual pay) have a maturity of 15 years, a face value of

WACC for a company. Cost of Debt (part question)

The 9% coupon bonds (semiannual pay) have a maturity of 15 years, a face value of $1,000, and are currently priced at $1,024.87 per bond. What is the cost of debt?

I've done half way, but do not know how to calculate YTM. Please help, thanks.

N = 15 x 2 = 30

PV = -1,024.87

FV = 1,000

PMT = 1,000 x 0.09 = $90

therefore, $90/2 = $45

I/YR = ?

Cost of debt:

$1,024.87 = $45 x PVIFA(30, YTM/2)+$1,000 x PVIF(30, YTM/2)

Solving, we find that YTM = 0.0870 (this is a pre-tax number)

How do you find YTM = 0.0870? How to get the answer 0.0870?

Is there another way to find PMT=$45 and is there another way to find cost of debt = 0.0870 ? Thank you.

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