Question: Interest is compounded annually unless stated otherwise. Payments are at the end of the year unless stated otherwise. All bonds have a face value of

Interest is compounded annually unless stated otherwise. Payments are at the end of the year unless stated otherwise. All bonds have a face value of $1000. Taxes are 0 unless specified otherwise.

6. RAM has 6-year bonds outstanding. The bonds have a coupon rate of 5%, with coupons paid semiannually. The face value is $1000. The bonds currently trade at $940 per bond. Find RAMs before-tax cost of debt.

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