What is the component cost of debt

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The Kenny Electric Company's non callable bonds were issued several years ago and now have 20 years to maturity. These bonds have a 9.25% annual coupon, paid semi annually, 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%

Reference no: EM13923683

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