Question $18$

$4\mathrm{.}44p$

Several years ago the Jakob Company sold a $$1,000$ par value, noncallable bond that now has $20$ years to maturity and a $7\mathrm{.}00\%$ annual coupon that is paid semiannually. The bond currently sells for $$875$ and the company's tax rate is $25\%.$ What is the component cost of debt for use in the WACC calculation? Enter answer as a percentage and round to $2$ decimal places.$($i$.$e$.,0\mathrm{.}1111$ equals $11\mathrm{.}11\%$ so the answer would be $11\mathrm{.}11).$