Wilson’s Cabinets has bonds outstanding that mature in eight years, ha

Wilson’s Cabinets has bonds outstanding that mature in eight years, have a 6 percent coupon and pay interest annually. These bonds have a face value of $1,000 and a current market price of $1,020. What is the company’s pre-tax cost of debt?

A) 5.68 percent
B) 6.19 percent
C) 6.34 percent
D) 6.82 percent
E) 7.57 percent

ANSWER

A