Several years ago the jakob company sold a 1000 par value, Ask an Expert

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Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $1,150, and the company's tax rate is 40%. What is the component cost of debt for use in the WACC calculation?

A) 4.16%
B)2.58%
C)2.89%
D) 3.44%
E) 3.71%

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