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 Preferred stock Equity Andalusian Limited (AL) can borrow funds at an interest rate of 10.20% for a period of six 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 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,229.24 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus- state tax rate of 25%. If 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.) 4.27% 2.85% 4.09% 3.56% Preferred stock Equity Andalusian Limited (AL) can borrow funds at an interest rate of 10.20% for a period of six years. Its marginal federal-plus-state tax rate is 25. ALS after-tax cost of debt is (rounded to two decimal places) At the present time, And 7.65% ited (AL)pas 5-year noncollable bonds with a face value of $1,000 that are outstanding. These boods have a current market price of 8.42% er bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company Incurs a federal.pl state tax rate of 25%. I o issue new debt, what would be a reasonable estimate for its after-tax cost of debt rounded to two decimal 10.20% places)? (Note: Round y te to two decimal place.) 8.80% 4.27% 2.8596 04.09% O 3.56% Grade It Now Save & Continue Continue without saving