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(Cost of debt ) Carraway Seed Company is issuing a $1,000 par value bond that pays 7 percent annual interest and matures in 6 years.

(Cost of debt ) Carraway Seed Company is issuing a $1,000 par value bond that pays 7 percent annual interest and matures in 6 years. Investors are willing to pay $930 for the bond Flotation costs will be 11 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 ?%. (Round to two decimal places.).

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