Back TO A A Attempts: Average: 73 2. An overview of a firm's cost of debt To calculate the after-tax cost of debt, multiply the before-tax cost of debt by (1-1) Three Waters Company (TWC) can borrow funds at an interest rate of 9.70% for a period of six years. Its marginal federal-plus-state tax rate is 25 TWC's after-tax cost of debt is (rounded to two decimal places). At the present time, Three Waters Company (TWC) has 5-year roncallable bonds with a face value of $1,000 that are outstanding. These bonds ha a current market price of $1,050.76 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 TWC wants to swe 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.) 5.22% 6.53% 5.88% 07.8496