0.09 Answer Question 8 (1 point) Sarapo Inc's are trading at their par value of $1,000...

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Question

0.09 Answer Question 8 (1 point) Sarapo Incs are trading at their par value of $1,000 and pay interest 4 times If each inter

Answer 1

Answer #1

Annual interest = 18 * 4 = 72

Coupon rate = (Annual coupon / face value) * 100

Coupon rate = (72 / 1000) * 100

Coupon rate = 7.2%

When bond is selling at par value, cost of debt will be equal to coupon rate

Cost of debt = 7.20%

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Answer 2

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