Calculate the cost of debt (before taxes) for a firm with a privately placed corporate bond with 5 years left to maturity. The bond was originally issued 5 years ago. The annual (fixed) interest expense is $18,000 and the book value of the bond is $250,000. The firms credit rating is currently BBB-. The 3-year, 5-year and 10-year treasury bond yields-to-maturity are currently 1.80, 2.70 and 3.30 %, respectively.

Rating	3 yr	5 yr	10 yr
BBB+	1.80%	2.10%	2.40%
BBB-	2.70%	3.10%	3.60%
BB+	4.10%	4.70%	5.40%

	A.	The firms (before tax) cost of debt is 6.90 %.
	B.	The firms (before tax) cost of debt is 3.10 %.
	C.	The firms (before tax) cost of debt is 7.20 %.
	D.	The firms (before tax) cost of debt is 6.40 %.
	E.	The firms (before tax) cost of debt is 5.40 %.
	F.	The firms (before tax) cost of debt is 4.90 %.
	G.	The firms (before tax) cost of debt is 6.30 %.
	H.	The firms (before tax) cost of debt is 5.80 %.
	I.	The firms (before tax) cost of debt is 2.70 %.