Question: 5 Dot.Com has determined that it could issue $1,000 face value bonds with an 8 per cent coupon paid semi-annually and a 5-year maturity at

5 Dot.Com has determined that it could issue $1,000 face value bonds with an 8 per cent coupon paid semi-annually and a 5-year maturity at $900 per bond. If the corporate tax rate is 30 per cent, its pre-tax cost of debt is closest to:

a. 5%

b. 10.63 %

c. 7.6%

d. 7.9%

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