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A firm s bondholders are earning a 7 . 5 % return and the firm s stockholders are earning a 1 5 % return. The

A firms bondholders are earning a 7.5% return and the firms stockholders are earning a 15% return. The firms financing is 35% debt and 65% equity. The firms average tax rate is 27%.
What is the firms after-tax cost of debt?
Group of answer choices
2.5%
3.5%
4.5%
5.5%
6.5%
7.5%
15%

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