(Cost of debt) Carraway Seed Company is issuing a $1 comma 000 par value bond that pays 7 percent annual interest and matures in 6 years. Investors are willing to pay $960 for the bond. Flotation costs will be 15 percent of market value. The company is in a 38 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?

The firm's after-tax cost of debt on the bond will be ___ %