A firm has a 28% tax rate and has decided to issue $250 million of 12-year debt. If it makes a Eurobond offering, the offeringwould carry an 8.5% coupon, paid annually, and issuing would cost $2.25 million. What is the after-tax cost (APY) of borrowing?

A.1.5262%

B.3.0507%

C.3.0984%

D.6.1060%

E.6.1978%

F.6.1984%

G.6.2076%

H.6.2247%

I.6.2461%

J.6.2792%

K.6.2928%

L.6.3028%

M.6.3821%

N.6.5394%

O.6.8193%

P.8.6095%

Q.8.6233%

R.8.6605%

S.8.7537%

T.8.7935%

U.8.8077%

A firm has a 28% tax rate and has decided to issue $250 million of 12-year debt.If it makes a U.S. public offering, the offering would carry an 8.5% coupon, paid semi-annually, and issuing would cost $2 million. What is the after-tax cost (APY) of borrowing?

A.1.5262%

B.3.0507%

C.3.0984%

D.6.1060%

E.6.1978%

F.6.1984%

G.6.2076%

H.6.2247%

I.6.2461%

J.6.2792%

K.6.2928%

L.6.3028%

M.6.3821%

N.6.5394%

O.6.8193%

P.8.6095%

Q.8.6233%

R.8.6605%

S.8.7537%

T.8.7935%

U.8.8077%