Your firm has a bond with 12 years to maturity, a coupon rate of 4.5% making...

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Question

Your firm has a bond with 12 years to maturity, a coupon rate of 4.5% making...

Your firm has a bond with 12 years to maturity, a coupon rate of 4.5% making payments semi-annually, a face value of $1000 that currently sells for $957?

What is your firm's cost of debt?

(Enter your response as a percentage with two decimal places, ex: 12.34)

business finance

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Answer 1

Answer #1

Firm's cost of debt is calculated using the RATE function:-

=RATE(nper,pmt,pv,fv)

=RATE(12*2,4.5%/2*1000,-957,1000)*2

=4.98%

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Answer 2

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