Kenny Electric Company's noncallable bonds were issued several years ago and now have 20 years to maturity. These bonds have a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000. If the firm's tax rate is 25%, what is the component cost of debt for use in the WACC calculation?   a. 5.73%     b. 6.35%     c. 6.03%     d. 6.67%     e. 5.44%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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Chapter6: Fixed-income Securities: Characteristics And Valuation
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Kenny Electric Company's noncallable bonds were issued several years ago and now have 20 years to maturity. These bonds have a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000. If the firm's tax rate is 25%, what is the component cost of debt for use in the WACC calculation?
  a. 5.73%  
  b. 6.35%  
  c. 6.03%  
  d. 6.67%  
  e. 5.44%
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