Problem:
Several years ago the Metalusa Inc. sold a $1,000 par value, noncallable bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company%u2019s tax rate is 40%.
Required:
Question: What is the component cost of debt for use in the WACC calculation?
Note: Please explain comprehensively and give step by step solution.