Before-tax cost of debtGronseth Drywall Systems, Inc., is in discussions with its investment bankers regarding the issuance of new bonds. The investment banker has informed the firm that different maturities will carry different coupon rates and sell at different prices. The firm must choose among several alternatives.

In each case, the bonds will have a

$1,000

par value and flotation costs will be

$40

per bond. Calculate the before-tax cost of financing with the following alternative.(Click on the icon here

in order to copy the contents of the data table below into a spreadsheet.)

Coupon rate	Time to maturity	Premium or discount
8%	7 years	$250

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Part 1

The before-tax cost of debt is

enter your response here%.

(Round to two decimal places.)