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3. Cost of debt Aa Aa E The is the interest rate that a firm pays on any new debt financing. Water and Power Company (WPC) can borrow funds at an interest rate of 9.70% for a period of five years. Its marginal federal-plusstate tax rate is 45%. WPC's after-tax cost of debt is (rounded to two decimal places). At the present time, Water and Power Company (WPC) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,555.38 per bond, carry a coupon rate of 11%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 45%. If WPC wants to issue new debt, what would be a reasonable estimate for its aftertax cost of debt (rounded to two decimal places)? 0 3.61% O 3.46% O 2.71% O 3.01%