Question: Keys Printing plans to issue a $1,000 par value, 15-year noncallable bond with an 8.80% annual coupon, paid semiannually. The company's marginal tax rate is

Keys Printing plans to issue a $1,000 par value, 15-year noncallable bond with an 8.80% annual coupon, paid semiannually. The company's marginal tax rate is 40.00%, but Congress is considering a change in the corporate tax rate to 25.00%. By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted? Do not round your intermediate calculations.

a. 2.64%

b. 0.66%

c. 1.32%

d. 0.22%

e. 0.33%

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