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)? O Preferred stock O Common stock O Debt Fuzzy Button Clothing Company (FBCC) can borrow funds at an interest rate of 10.20% for a period of six years. Its marginal federal-plus-state tax rate is 40%. FBCC's after-tax cost of debt is (rounded to two decimal places). At the present time, Fuzzy Button Clothing Company (FBCC) has a series of five-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%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 40%. If FBCC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? O 2.85% O 1.98% O 2.48% O 2.23%