Question: Hello! Could you solve this problem step by step, please? I don't want an excel calculation. Thanks in advance. CAN YOU DO IT? CALCULATING THE

Hello! Could you solve this problem step by step, please? I don't want an excel calculation. Thanks in advance.

CAN YOU DO IT? CALCULATING THE COST OF DEBT FINANCING General Auto Parts Corporation recently issued a 2-year bond with a face value of $20 million and a coupon rate of 5.5 percent per year (assume interest is paid annually). The subsequent cash flows to General Auto Parts were as follows: TODAY YEAR 1 YEAR 2 Principal $18 million ($0.00 million) ($20 million) Interest ($0.99 million) ($0.99 million) Total $18 million ($0.99 million) ($20.99 million) What was the cost of capital to General Auto Parts for the debt issue? (The solution can be found on page 280.)

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