A firm has 10,000,000 shares of common stock outstanding, each with a market price of $15 per share. It has 80,000 bonds outstanding, each selling for $1020. The bonds mature in 15 years, have a coupon rate of 9 %, and pay coupons semi- annually. The firm's equity has a beta of 1.9, and the expected market return is 10%. The tax rate is 30% and the risk free rate is 4%.

What is the cost debt ?

A ) 4.4%

B) 6.0%

C) 8.8 %

D) 15.4%

E) 18.5%