2. An overview of a firm's cost of debt To calculate the after-tax cost of debt, multiply the before-tax cost of debt by Andalusian Limited (AL) can borrow funds at an interest rate of 10.20 % for a period of four 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.) O 4.09% O 2.85 % O 3.20 % O 3.56 % Grade It Now Save &Continue Continue without saving