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For which capital component must you make a tax adjustment when calculating a firm's weighted average cost of capital (WACC)? O Equity O Preferred stock
For which capital component must you make a tax adjustment when calculating a firm's weighted average cost of capital (WACC)? O Equity O Preferred stock O Debt Three waters Company (TWC) can borrow funds at an interest rate of 9.70% for a period of seven years. Its marginal federal-plus-state tax rate is 40%. TWC's after-tax cost of debt is (rounded to two decimal places) At the present time, Three Waters Company (TWC) has 20-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 40%. If TWC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? O 7.42% 6.45% 774% O 5.81%
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