Debt The firm can raise an unlimited amount of debt by selling $1,000-parvalue, 8% coupon interest rate, 20-year bonds on which annual interest payments will be made. To sell the issue, an average discount of $30 per bond would have to be given. The firm also must pay flotation costs of $30 per bond. Calculate Cost of debt?

Select one:

a. 5.55%

b. 9.55%

c. 8.55%

d. 10.55%