Omaro Ltd Has $34 Million Worth of Bonds Outstanding with an an Interest

Multiple Choice

Omaro Ltd. has $34 million worth of bonds outstanding with an interest rate of 8% and redemption in 4 years. The issue price of the bond is $90 per $100 of nominal value. The company's tax rate is 24%. Using trial values of 8% and 12%, what is the company's after tax cost of capital for the bonds?

A) 7.8%
B) 8.6%
C) 9.3%
D) 11.3%
E) 12.0%