Question $8$

$3$ pts

John Nash Inc. issued a $$1,000$ par value noncallable bond several years ago, that now has $20$ years to maturity and a $7\mathrm{.}00\%$ annual coupon that is paid quarterly. The bond currently sells for $$925,$ and the company's tax rate is $40\%.$ What is the component cost of debt?

$9\mathrm{.}29\%$

$4\mathrm{.}65\%$

$1\mathrm{.}16\%$

$8\mathrm{.}56\%$

$2\mathrm{.}32\%$