For which capital component must you make a tax adjustment when calculating a firm's weighted average cost of capital (WACC)? Debt Preferred stock Equity Water and Power Company (WPC) can borrow funds at an interest rate of 11.10% for a period of four years. Its marginal federal-plus-state tax rate is 35%. WPC's after-tax cost of debt is ___ (rounded to two decimal places). At the present time, Water and Power Company (WPC) has 10-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1, 092.79 per bond, carry a coupon rate of 11%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 35%. If WPC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? 7.12% 4.95% 7.43% 6.19%