Costa Inc. is a Colombia coffee company. You have computed a synthetic rating of BBB (with a default spread of 3%) for the company. The US treasury bond rate is 3%, the Colombian Government US $ bond rate is 5.4% and the Colombian Government Peso bond rate is 6.5%. What is the US$ pre-tax cost of debt for Costa?

Select one:

a. 6.5%

b. 4.5%

c. 3.00%

d. 8.4%

e. 5.0%