At the present time, Andalusian Limited (AL) has 5-year noncallable bonds with a face value...
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At the present time, Andalusian Limited (AL) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,229.24 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus- state tax rate of 40%. 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)? O 2.27% 2.84% 0 3.41% 3.27%
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