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Delta Corp has 6.5% coupon semiannual bonds outstanding (face value of $1000), with 10 years left...

Delta Corp has 6.5% coupon semiannual bonds outstanding (face value of $1000), with 10 years left to maturity, and a price of $860. The firm’s marginal tax rate is 25%. Delta’s marginal pre-tax cost of debt is estimated to be:

8.40%

8.96%

8.55%

8.62%

9.30%
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Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

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