To 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 $1,025,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? Do not round your intermediate calculations.
A) 5.93%
B) 5.93%.
C) 5.39%
D) 6.09%
E) 4.69%
Correct Answer:
Verified
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