Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below. Assets Current assets Net plant, property, and equipment Total assets Liabilities and Equity $38,000,000 $101,000,000 $139,000,000 Accounts payable $10,000,000 Accruals $9,000,000 Current liabilities $19,000,000 Long-term debt (40,000 bonds, $1,000 par value) $40,000,000 Total liabilities $59,000,000 Common stock (10,000,000 shares) $30,000,000 Retained earnings $50,000,000 Total shareholders' equity Total liabilities and shareholders' equity $80,000,000 $139,000,000 The stock is currently selling for $17.65 per share, and its noncallable $1,000.00 par value, 20-year, 8.00% bonds with semiannual payments are selling for $873.17. The beta is 0.90, the yield on a 6-month Treasury bill is 3.00%, and the yield on a 20-year Treasury bond is 5.00%. The required return on the stock market is 13.00%, but the market has had an average annual return of 16.00% during the past 5 years. The firm's tax rate is 25%. What is the best estimate of the after-tax cost of debt? a. 3.53% b. 9.42% c. 3.76% d. 7.07% e. 7.53%