To calculate the after$-$tax cost of debt, multiply the before$-$tax cost of debt by$(1$ T$).$

Water and Power Company $($WPC$)$ can borrow funds at an interest rate of $7\mathrm{.}30\%$ for a period of four years. Its marginal federal$-$plus$-$state tax rate is $25\%.$ WPC$$s after$-$tax cost of debt is $($rounded to two decimal places$).$

At the present time, Water and Power Company $($WPC$)$ has $5-$year noncallable bonds with a face value of $$1,000$ that are outstanding. These bonds have a current market price of $$1,438\mathrm{.}04$ per bond, carry a coupon rate of $14\%,$ and distribute annual coupon payments. The company incurs a federal$-$plus$-$state tax rate of $25\%.$ If WPC wants to issue new debt, what would be a reasonable estimate for its after$-$tax cost of debt $($rounded to two decimal places$)?($Note: Round your YTM rate to two decimal place.$)$

$3\mathrm{.}72\%$

$3\mathrm{.}57\%$

$3\mathrm{.}10\%$

$2\mathrm{.}48\%$