Determine component cost of debt for use in wacc calculation, Finance Basics

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Determine component cost of debt for use in wacc calculation

Several years ago the Pettijohn Company sold a $1,000 par value, noncallable bond that now has 15 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $950, and the company's tax rate is 34%. To issue new bonds, Pettijohn would incur 3% flotation costs. What is the component cost of debt for use in the WACC calculation?

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Finance Basics: Determine component cost of debt for use in wacc calculation

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