Suppose you are trying to estimate the after tax cost of debt for a firm as part
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Question:
Suppose you are trying to estimate the after tax cost of debt for a firm as part of the calculation of the Weighted Average Cost of Capital (WACC). The corporate tax rate for this firm is 32%. The firm's bonds pay interest semiannually with a 6.9% coupon rate and have a maturity of 14 years. If the annual yield to maturity of the bonds is 6.61%, what is the after tax cost of debt for this firm?
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