The current price of a $1 000 face value bond is $840 This bond has 12 years left to maturity and pays interest

Question

The current price of a $1,000 face value bond is $840. This bond has 12 years left to maturity and pays interest

semi-annually based on a coupon rate of 3%. If the company pays taxes at the rate of 35%, what is the company’s cost of debt?

1.95%

3.10%

4.76%

3.10%

Finance