A firm has outstanding debt with a coupon rate of 6%, 10 years' maturity, and a price of $1 000 per $1 000 face value. What is the after-tax cost of debt if the marginal tax rate of the firm is 30%?
A) 2.9%
B) 3.2%
C) 3.9%
D) 4.2%
Correct Answer:
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