The IPL Sports Company has issued 8% coupon bonds. Coupons are paid on a quarterly basis, the bonds have a R1 000 par value and will mature in 10 years. The bonds are currently selling at a price of R900. The company's tax rate is 28%. What is the firm's component cost of debt for purposes of calculating the weighted average cost of capital (WACC)?

Select one:

a. 6.88%

b. 8.00%

c. 9.56%

d. 10.00%

e. 2.39%

Answer rating: 100% (QA)

Quarterly coupon payment Coupon rate4Par value 841000 20 Since coupon is paid semiannua... View the full answer