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The current market price of Smith Corporations 10 percent, 10 year bonds is $1,297.58. A 10 percent coupon interest rate is paid semiannually, and the

The current market price of Smith Corporations 10 percent, 10 year bonds is $1,297.58. A 10 percent coupon interest rate is paid semiannually, and the par value is equal to $1,000. What is the after-tax cost of debt with 40% tax rate?

Please explain why the answer is 3.6%

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