Question $19$

A company's target capital structure is $25$ percent debt and $75$ percent common equity. Its

bonds have a $6$ percent coupon, paid annually, a current maturity of $10$ years, and sell for

$$950.$ The firm's marginal tax rate is $21$ percent. Which of the following is Rollins' after tax

cost of debt?

$6\mathrm{.}70\%$

$5\mathrm{.}29\%$

$6\mathrm{.}00\%$