This bond has a 9.

Question 7

To help finance a major expansion, ABC 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 $875, and has a par value of $1,000. If the firm's tax rate is 35%, what is the after-tax cost of debt for use in the WACC calculation?

1.5.95%

2.7.01%

3.5.31%

4.6.15%

5.5.63%