A Corporate Bond Has a Face Value of $1,000 and a Coupon

Multiple Choice

A corporate bond has a face value of $1,000 and a coupon rate of 5%.The bond matures in 15 years and has a current market price of $925.If the corporation sells more bonds,it will incur flotation costs of $25 per bond.If the corporate tax rate is 35%,what is the after-tax cost of debt capital?

A) 3.74%
B) 4.45%
C) 5.29%
D) 6.78%