$1.$ An overview of a firm's cost of debt

To calculate the after$-$tax cost of debt, multiply the before$-$tax cost of debt by $.$

Omni Consumer Products Company $($OCP$)$ can borrow funds at an interest rate of $11\mathrm{.}10\%$ for a period of five years. Its marginal federal$-$plus$-$state tax rate is $40\%.$ OCP$$s after$-$tax cost of debt is $($rounded to two decimal places$).$

At the present time, Omni Consumer Products Company $($OCP$)$ has $15-$year noncallable bonds with a face value of $$1,000$ that are outstanding. These bonds have a current market price of $$1,555\mathrm{.}38$ per bond, carry a coupon rate of $11\%,$ and distribute annual coupon payments. The company incurs a federal$-$plus$-$state tax rate of $40\%.$ If OCP wants to issue new debt, what would be a reasonable estimate for its after$-$tax cost of debt $($rounded to two decimal places$)?$

$2\mathrm{.}63\%$

$2\mathrm{.}96\%$

$3\mathrm{.}78\%$

$3\mathrm{.}29\%$