A companys 8 coupon rate semiannual payment 1000 par value, Ask an Expert

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A company's 8% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $562.08. The company's federal-plus-state tax rate is 35%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to two decimal places. Show work.

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