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Keys Printing plans to issue a $1,000 par value, 20-year noncallable bond with a 7.00%...

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Accounting

Keys Printing plans to issue a $1,000 par value, 20-year noncallable bond with a 7.00% 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 45.00%. By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted?

a. 0.42%
b. 0.44%
c. 0.30%
d. 0.36%
e. 0.35%

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