Problem:
To help finance a major expansion, Castro Chemical Company sold a non-callable bond several years ago that now has 20 years to maturity. This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $875, and has a par value of $1,000.
Required:
Question: If the firm's tax rate is 40%, what is the component cost of debt for use in the WACC calculation?
Note: Please provide full description.