Akeya Equipment has 120,000 non-callable semiannual bonds outstanding with a 8 percent coupon interest and par value of $1,000. The bonds have 15 years to maturity and sells for 95 percent of the par. The companys average tax rate is 35%. What is the pre-tax cost of debt (R_D)?

	1.	6.00 percent
	2.	8.00 percent
	3.	8.60 percent
	4.	9.50 percent
	5.	10.00 percent