2. An overview of a firm's cost of debt For which capital component must you make a tax adjustment when calculating a firm's weighted average cost of capital (WACC)? Debt Equity Preferred stock Andalusian Limited (AL) can borrow funds at an interest rate of 11.10% for a period of seven years. Its marginal federal-plus-state tax rate is 25%. AL'S after-tax cost of debt is (rounded to two decimal places). At the present time, Andalusian Limited (AL) has 10-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,495.56 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company Incurs a federal-plus- state tax rate of 25%. 18 AL 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.) 3.38% 0 2.65% 2.94% 3.53% Chapter 10 Homework Back to Assignment Attempts 1 Keep the Highest 1/3 2. An overview of a firm's cost of debt For which capital component must you make a tax adjustment when calculating a firm's weighted averas O Debt O Equity O Preferred stock Andalusian Limited (AL) can borrow funds at an interest rate of 11.10% for a period of seven years. Its AL's after-tax cost of debt is (rounded to two decimal places). 11.10% At the present time, Andalusi CAL) has 10-year noncollable bonds with a face value of $1,000 current market price of $1.49 8.32% pod, carry a coupon rate of 10%, and distribute annual coupon p state tox rate of 25%. IT ALW we new debt, what would be a reasonable estimate for its after- 7.07% places)? (Note: Round your two decimal place.) 9.57% O 3.38% 0 2.65% 2.94% O 3.53% GA