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Suppose we have a bond issue currently outstanding that has 25 years left to maturity. The coupon rate is 9%, and coupons are paid semiannually.

Suppose we have a bond issue currently outstanding that has 25 years left to maturity. The coupon rate is 9%, and coupons are paid semiannually. The bond is currently selling for $908.72 per $1,000 bond. What is the after-tax cost of debt if the tax rate is 45%?

A. 3.25% B. 5.50% C. 6.50% D. 7.75% E. 10.00%

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