Crandal Dockworks is undergoing a major expansion. The expansion will be financed by issuing new 15-year, $1,000 par, 10% semi-annual coupon bonds. The market price of the bonds is $1,090 each. Crandal's flotation expense on the new bonds will be $40 per bond. Crandal's marginal tax rate is 25%. What is the After-Tax cost of debt for the newly-issued bonds?

A) 6.68% B) 7.03% C) 7.21% D) 7.54%

B is the correct answer, please show how you arrive at that answer