Problem:
Cost of debt. kenny enterprises has just issued a bond with a par value of $1,000, twenty years to maturity, and a coupon rate of 7.7% with semiannual payments. What is the cost of debt for Kenny Enterprises if the bond sells at the following prices? What do you notice about the price and the cost of debt?
Required:
Question 1: What is the cost of debt for Kenny Enterprises if the bond sells at $919.22?
Question 2: What is the cost of debt for Kenny Enterprises if the bond sells at $1,000.00?
Question 3: What is the cost of debt for Kenny Enterprises if the bond sells at $1,025.79?
Question 4: What is the cost of debt for Kenny Enterprises if the bond sells at $1,141.81?
Note: Please explain comprehensively and give step by step solution.