To calculate the after-tax cost of debt, multiply the before-tax cost of debt by Western Gas & Electric Company (WGC) can borrow funds at an interest rate of 11.10% for a period of four years. Its...

Extracted text: To calculate the after-tax cost of debt, multiply the before-tax cost of debt by Western Gas & Electric Company (WGC) can borrow funds at an interest rate of 11.10% for a period of four years. Its marginal federal-plus-state tax rate is 40%. WGC's after-tax cost of debt is (rounded to two decimal places) At the present time, Western Gas & Electric Company (WGC) has 20-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,382.73 per bond, carry a coupon rate of 13%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 40%. 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)? 4.78% 5.31% 4.25% 6.37%