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QUESTION
AFTER-TAX COST OF DEBT The Holmes Company's currently outstanding bonds have a 8% coupon and a 14% yield to maturity.
AFTER-TAX COST OF DEBT
The Holmes Company's currently outstanding bonds have a 8% coupon and a 14% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is Holmes's after-tax cost of debt? Round your answer to two decimal places.
