What is the component cost of debt for wacc calculation

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Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $1,200, and the company's tax rate is 40%. What is the component cost of debt for use in the WACC calculation?

Choose one Answer:

2.54%
2.70%
3.09%
3.21%
3.63%

Reference no: EM13293909

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