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We want to estimate the cost of debt for Caterpillar. We find the bond is currently trading at $1,025 with a maturity of 28 years.

We want to estimate the cost of debt for Caterpillar. We find the bond is currently trading at $1,025 with a maturity of 28 years. The bond pays a semi-annual coupon rate of 6.05%. If we assume that the bond has very little default risk, what is Caterpillars cost of debt?

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