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A firm has outstanding debt with a coupon rate of 8%, ten yearsmaturity, and a price of$1000 per$1000 face value. What is theafter-tax cost of

A firm has outstanding debt with a coupon rate of 8%, ten yearsmaturity, and a price of$1000 per$1000 face value. What is theafter-tax cost of debt if the marginal tax rate of the firm is 35%?

5.2%

4.7%

5.5%

4.2%

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