Help Finance a Major Expansion, Castro Chemical Company Sold a Noncallable

question 67

Multiple Choice

help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to maturity.This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000.If the firm's tax rate is 40%, what is the component cost of debt for use in the WACC calculation?

• A)4.35%
• B)4.58%
• C)4.83%
• D)5.08%
• E)5.33%

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