Business, 08.07.2021 16:10 andrewmena05

At the present time, Water and Power Company (WPC) has 10-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,495.56 per bond, carry a coupon rate of 10%, 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.) a. 3.53%
b. 3.38%
c. 2.35%
d. 2.94%

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At the present time, Water and Power Company (WPC) has 10-year noncallable bonds with a face value o...