A firm has issued $10 million in long-term bonds that now have 8 years remaining until maturity. The bonds carry a 7% annual coupon and are selling in the market for $1071.55. The firm also has $25 million in market value of common stock. For cost of capital purposes, what portion of the firm is debt financed and what is the after-tax cost of debt, if the tax rate is 35%?

40.00% debt financed; 2.93% after-tax cost of debt

70.00% debt financed; 4.55% after-tax cost of debt

28.57% debt financed; 1.91% after-tax cost of debt

30.00% debt financed; 3.81% after-tax cost of debt