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Business, 24.12.2019 23:31 ashleyann9549

Three waters company (twc) can borrow funds at an interest rate of 11.10% for a period of six years. its marginal federal-plus-state tax rate is 25%. twc’s after-tax cost of debt is (rounded to two decimal places). at the present time, three waters company (twc) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. these bonds have a current market price of $1,329.55 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. the company incurs a federal-plus-state tax rate of 25%. if twc wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (note: round your ytm rate to two decimal place.)

a. 5.48%

b. 7.31%

c. 6.09%

d. 7.00%.

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