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Mullineaux Corporation has a target capital structure of 41 percent common stock and 6 percent preferred stock, with the remaining percent in debt. Its cost

Mullineaux Corporation has a target capital structure of 41 percent common stock and 6 percent preferred stock, with the remaining percent in debt. Its cost of equity is 8 percent, the cost of preferred stock is 3 percent, and the pretax cost of debt is 7 percent. The relevant tax rate is 31 percent. What is the aftertax cost of debt?

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