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Loman has an outstanding bond issue with a $1,000 par value that has a 7.75% semiannual coupon, a current maturity of 20 years, and sells

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Loman has an outstanding bond issue with a $1,000 par value that has a 7.75% semiannual coupon, a current maturity of 20 years, and sells for $967.97. The firm's income tax rate is 40%. What should Loman use as an after-tax cost of debt for cost of capital purposes? 4.04% 2.42% 4.85% 8.08%

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