Answer:
2.95%
Explanation:
In this question, we use the Rate formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Present value = $1,000 × 109% = $1,090
Assuming figure - Future value or Face value = $1,000
PMT = 1,000 × 4% ÷ 2 = $20
NPER = 10 years × 2 = 20 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
The pretax cost of debt is 2.95%
