1. An overview of a firm's cost of debt Aa Aa The is the interest rate that a firm pays on any new debt financing. Water and Power Company (WPC) can borrow funds at an interest rate of 10.20% for a period of eight years. Its marginal federal-plus-state tax rate is 30%. WPC's after-tax cost of debt is (rounded to two decimal places) At the present time, water and Power Company (WPC) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,438.04 per bond, carry a coupon rate of 14%, ah distribute annual coupon payments. The company Incurs a federal-plus-state tax rate of 30%. If WPC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? 2.60% 2.31% 2.89% 3.47%