ABC Co. issues $1,000 par value, 7.2% semiannual coupon bonds, with 15 years to maturity. The company sells the bonds for $750. Find the after-tax cost of debt assuming a tax rate of 35%. ABC Co. issues $1,000 par value, 7.2% semiannual coupon bonds, with 15 years to maturity. The company sells the bonds for $750. Find the after-tax cost of debt assuming a tax rate of 35%.

2.57%

4.08%

6.86%

5.28%