XYZ Corporation is considering issuing bonds to raise funds for a new project. The company's current stock price is $50 per share, and it has 1 million shares outstanding. The company's target capital structure is 60% equity and 40% debt. The company plans to issue $5 million in bonds with a 6% coupon rate and a maturity of 10 years. The company's marginal tax rate is 25%. What is the after-tax cost of debt, and what will be the company's new weighted average cost of capital (WACC) after issuing the bonds?

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The detailed answer for the above question is provided below The aftertax cost of debt is the cost o... View the full answer