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Problem 10-1 After-tax Cost of Debt The Holmes Company's currently outstanding bonds have a 8% coupon and a 14% yield to maturity. Holmes believes it

Problem 10-1 After-tax Cost of Debt

The Holmes Company's currently outstanding bonds have a 8% coupon and a 14% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is Holmes's after-tax cost of debt? Round your answer to two decimal places.

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