Builtrite Furniture is considering sells bonds for a plant expansion. Currently, Builtrite believes that it could sell 15 year maturity, $1000 par value, 3 3/8% coupon bonds after flotation costs for $1045. If Builtrite is in the 34% marginal tax bracket, what is the after-tax cost for the bonds?

2.99%

2.35%

1.97%

3.57%