A company has a cost of equity of 13.54% and an unlevered cost of capital of 9.68%. The company has $17,478 in debt that is selling at par value. The levered value of the firm is $31,108, and the tax rate is 27%. What is the pre-tax cost of debt?

1) 5.56

2) 5.70

3) 5.83

4) 5.97

5) 6.11