Ch 10: Assignment -The Cost of Capital 2. An overview of a firm's cost of debt For which capital component must you make a tax adjustment when calau ating a firm's weighted average cost of capital (WACC)? Equity O Preferred stock O Debt Perpetualood Refrigeration Company (PRC) can borrow funds at an interest rate of 12.50% for a period of four years. Its marginal federal-plus-state tax rate is 40%. PRC's after-tax cost of debt is (o places). (rounded to two decimal At the present time, Perpetualcoid Refrigeration Company (PRC) 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 40%. If PRC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? 4.89% 6.11% o 7.0396 7.33% O Type here to search F F2F3 F4FSFF FFF