Wasser, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 12 years to maturity that is quoted at 97 percent of face value. The issue makes semiannual payments and has a coupon rate of 10 percent. The tax rate is 25 percent. Enter your answers as a percent rounded to 3 decimal places, e.g., enter 32.161% as 32.161, not 0.32161. Hint. Solve for the YTM and adjust for taxes.

The after-tax cost of debt is %

Hint: Use a financial calculator to solve for the yield to maturity of the bonds. Remember the negative sign on the price. Remember to divide/multiply by 2 when entering the PMT and N. Compute I and multiply by 2 to get the yield to maturity (ann). Then multiply by 1-taxrate to get the after-tax cost.