Answer:
6.84%
Explanation:
In this problem, we are using the Rate formula which is shown in the spreadsheet.
The NPER is defined by the time period.
Given that,
Present value = $1,015
Assuming figure - Future value or Face value = $1,000
PMT = 1,000 × 7% ÷ 2 = $35
NPER = 16 years × 2 = 32 years
The formula is displayed below:
= Rate(NPER,PMT,-PV,FV,type)
The present value come in negative
Thus, after solving this, The pretax cost of debt is 6.84% (3.42% × 2)
