Business, 03.07.2020 18:01 genaroaG6119

The is the interest rate that a firm pays on any new debt financing. Western Gas & Electric Company (WGC) can borrow funds at an interest rate of 10.20% for a period of four years. Its marginal federal-plus-state tax rate is 45%. WGC's after-tax cost of debt is (rounded to two decimal places) At the present time, Western Gas & Electric Company (WGC) has 10-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,495.56 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 45%. If WGC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)?

a. 1.94%
b. 2.59%
c. 2.16%
d. 2.48%

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The is the interest rate that a firm pays on any new debt financing. Western Gas & Electric Comp...

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