Madison Square Stores has a $20 million bond issue outstanding that currently has a market value of $18.6 million.The bonds mature in 6.5 years and pay semiannual interest payments of $35 each.What is the firm's pretax cost of debt?
A) 4.21 percent
B) 8.42 percent
C) 7.58 percent
D) 7.74 percent
E) 7.80 percent
Correct Answer:
Verified
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