The is the interest rate that a firm pays on any new debt financing. Bedrick Co. can borrow at an interest rate of 12.5% for a period of four years. Its marginal federal-plus-state tax rate is 40%. What is Bedrick's after-tax cost of debt? Bedrick Co. has outstanding 15-year no callable bonds with a face value of $1,000. These bonds have a current market price of $1, 555.38, a coupon rate of 11%, and annual coupon payments. The company faces a tax rate of 40%. If the company wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt? 3.29% 2.63% 2.96% 3.78%