Several years ago the Haverford Company sold a $1,000 par value bond that now has 25 years to maturity and an 8 00 annual coupon that is paid quarterly The bond currently sells for $900 90, and the companys tax rate is 40 What is the component cost of debt for use in the WACC calculation 5 40 5 73 ...

Computation of the Cost of Debt using exce ...

Several years ago the Haverford Company sold a $1,000 par value bond that now has 25 years

Question:

Several years ago the Haverford Company sold a $1,000 bond that now has 25 years to and an 8.00% annual that is paid quarterly. The bond currently sells for $900.90, and the company’s tax rate is 40%. What is the component for use in the WACC calculation?
5.40%
5.73%
5.98%
6.09%
6.24%

Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...