Oberon Inc. has a $20 million ($1,000 face value) 10-year bond issue selling for 99 percent of par that pays an annual coupon of 7.25 percent. What would be Oberon's before-tax component cost of debt?
A) 6.12 percent
B) 7.02 percent
C) 7.40 percent
D) 8.15 percent

Question

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The Answer of Oberon Inc. has a $20 million ($1,000 face value) 10-year bond issue selling for 99 percent of par that pays an annual coupon of 7.25 percent. What would be Oberon's before-tax component cost of debt?
A) 6.12 percent
B) 7.02 percent
C) 7.40 percent
D) 8.15 percent