ANswer this question and its parts

2-To calculate the after-tax cost of debt, multiply the before-tax cost of debt by

A)(1-T)

B) (1+T) .

Andalusian Limited (AL) can borrow funds at an interest rate of 9.70% for a period of six years. Its marginal federal-plus-state tax rate is 45%. ALs after-tax cost of debt is (rounded to two decimal places).

At the present time, Andalusian Limited (AL) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,136.50 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 45%. 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.)

A)5.60%

B)6.72%

C)6.44%

D)5.04%