Decline,Inc

Multiple Choice

Decline,Inc.is trying to determine its cost of debt.The firm has a debt issue outstanding with 15 years to maturity that is quoted at 107 percent of face value.The issue makes semiannual payments and has an embedded cost of 9 percent annually.What is the aftertax cost of debt if the tax rate is 39 percent?

A) 4.99 percent
B) 5.90 percent
C) 6.17 percent
D) 7.37 percent
E) 7.42 percent