Answer choices for "CGMW's after-tax cost of debt is" (9.35%, 6.91%, 8.13%, 7.72%.)

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2. An overview of a firm's cost of debt Aa Aa To calculate the after-tax cost of debt, multiply the before-tax cost of debt by -T) Cold Goose Metal works (CGMw) can borrow funds at an interest rate of 12.50% for a period of seven years. Its marginal federal-plus-state tax rate is 35%. CGMW's after-tax cost of debt is places). (rounded to two decimal At the present time, Cold Goose Metal Works (CGMW) has a series of twenty-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,181.96 per bond, carry a coupon rate of 13%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 35%. If CGMW wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? 5.59% 0 6.29% 6.99% 8.39%