2. An overview of a firm's cost of debt The before-tax cost of debt is the interest rate that a firm pays on any new debt financing. Western Gas & Electric Company (WGC) can borrow funds at an interest rate of 12.50% for a period of seven years. Its marginal federal-plus-state tax rate is 30%. WGC's after-tax cost of debt is (rounded to two decimal places). At the present time, Western Gas & Electric Company (WGC) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,329,55 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. The company Incurs a federal-plus-state tax rate of 30%. If WGC 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.) 4.54% 5.11% 5.689 6.53% Grade It Now Save & Continue Continue without saving