The market price of a bond is $1129 (Face Value = 1000). It has 14 years to maturity and pays an annual coupon of $100 in semi-annual installments.

The market price of a bond is $1129 (Face Value = 1000). It has 14 years to maturity and pays an annual coupon of $100 in semi-annual installments. What is the effective annual cost of debenture capital before tax (kd)?

4.21%

7.39%

5.00%

8.59%

10.00%

 8.42%