ADK Has 30,000 15-Year 9% Semi-Annual Coupon Bonds Outstanding

Multiple Choice

ADK has 30,000 15-year 9% semi-annual coupon bonds outstanding. If the bonds currently sell for 90% of par and the firm pays an average tax rate of 32%, what will be the before-tax and after-tax component cost of debt?

A) 11.19%; 7.61%
B) 10.32%; 7.02%
C) 9.85%; 6.70%
D) 10.12%; 6.88%