Bristol plc has convertible debentures with a coupon rate of 10% in issue trading at 108%. The debentures are redeemable at par in five years' time, or convertible at that point into 20 ordinary shares of the firm. The company's current share price is 3.50 and is expected to grow at 6% p.a. Bristol plc faces a corporation tax rate of 20%. Which of the following is the best estimate of the after- tax cost of these debentures? A6% B 8% 9% D 10% E 12%