Catnip 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 $30 each. What is the firm's pre-tax cost of debt?
A) 6.99 percent
B) 7.37 percent
C) 7.58 percent
D) 7.74 percent
E) 7.80 percent
Correct Answer:
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