Maple industries has 7 percent bonds outstanding that mature in thirteen years. the bonds pay interest semiannually and have a face value of $1,000. currently, the bonds are selling for $1,021.16. what is the firm's pre-tax cost of debt? a. 6.75%
b. 6.84%
c. 6.91%
d. 7.03%
e. 7.14%

A. 6.75%

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 = $1,021.16

Future value or Face value = $1,000  

PMT = 1,000 × 7% ÷ 2 = $35

NPER = 13 years × 2 = 26 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 6.75%     (3.38% × 2)