Problem:
Lydias, Inc., has a 6% bonds outstanding that mature in fourteen years. The bonds pay interest semiannually and have a face value of $1,000. Currently, the bonds are selling for $1,200 each.
Requirement:
Question: What is the firm's pretax cost of debt now?
- 2.05%
- 2.37%
- 3.25%
- 4.10%
- 4.74%
Note: Show all workings.