The Outstanding Bonds of Tech Express Are Priced at $1,023

Multiple Choice

The outstanding bonds of Tech Express are priced at $1,023 and mature in 13 years. These bonds have a face value of $1,000, a coupon rate of 6.5 percent, and pay interest semiannually. The tax rate is 21 percent. What is the aftertax cost of debt?

A) 4.28 percent
B) 4.22 percent
C) 4.35 percent
D) 4.93 percent
E) 4.41 percent