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To calculate the after - tax cost of debt, multiply the before - tax cost of debt by . Andalusian Limited ( AL ) can

To calculate the after-tax cost of debt, multiply the before-tax cost of debt by .
Andalusian Limited (AL) can borrow funds at an interest rate of 11.10% for a period of seven years. Its marginal federal-plus-state tax rate is 25%. ALs after-tax cost of debt is (rounded to two decimal places).
At the present time, Andalusian Limited (AL) has 20-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,382.73 per bond, carry a coupon rate of 13%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If AL 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.)
7.64%
6.64%
5.31%
5.98%

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