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 peso pre-tax cost of debt for Costa?

Select one:

a. 3.00% b. 9.5% c. 8.4% d. 6.5% e. 5.0%