1. Green Caterpillar Garden Supplies (GCGS) can borrow funds at an interest rate of 11.10% for a period of eight years. Its marginal federal-plus-state tax rate is 40%. GCGSs after-tax cost of debt is _____? (rounded to two decimal places).

2. At the present time, Green Caterpillar Garden Supplies (GCGS) has a series of ten-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,495.56 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 40%. If GCGS wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)?

A) 2.35%

B) 1.88%

C) 2.12%

D) 2.82%