A firm has outstanding debt with a coupon rate of 7%, seven years' maturity, and a price of $1 000 per $1000 face value. What is the after-tax cost of debt if the marginal tax rate of the firm is 30%?
A) 4.9%
B) 5.2%
C) 5.9%
D) 5.5%
Correct Answer:
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