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The coupon rate on an issue of debt is 9%. The yield to maturity on this issue is 9%. The corporate tax rate is 40%.

The coupon rate on an issue of debt is 9%. The yield to maturity on this issue is 9%. The corporate tax rate is 40%. What would be the approximate after-tax cost of debt for a new issue of bonds? (Round your answer to 2 decimal places.) 6.85% 7.55% 5.40% 4.05%

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