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3. A firm offers a 15-year maturity bond with $1,000 face value and 6% coupon rate. The current market price for the bond is $998.

3. A firm offers a 15-year maturity bond with $1,000 face value and 6% coupon rate. The current market price for the bond is $998. Selling the bonds costs the firm $60 per share. What is the after-tax cost of this debt, assuming a 34% corporate tax?

a. 6.60%

b. 8.12%

c. 4.40%

d. 31.73%

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