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Mullineaux Corporation has a target capital structure of 47 percent common stock and5 percent preferred stock, with the remaining percent in debt. Its cost of

Mullineaux Corporation has a target capital structure of 47 percent common stock and5 percent preferred stock, with the remaining percent in debt. Its cost of equity is 8 percent, the cost of preferred stock is 5 percent, and the pretax cost of debt is 5 percent. The relevant tax rate is 38 percent. What is the aftertax cost of debt?

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