KatyDid Clothes Has a $150 Million ($1,000 Face Value) 15-Year

question 113

Multiple Choice

KatyDid Clothes has a $150 million ($1,000 face value) 15-year bond issue selling for 106 percent of par that carries a coupon rate of 8 percent, paid semiannually. What would be KatyDid's before-tax component cost of debt?

• A) 3.67 percent
• B) 7.34 percent
• C) 8.12 percent
• D) 7.09 percent

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