Faulkner Corporation is contemplating a new investment to be financed with debt. The firm could sell new $1,000 par value bonds with a 7.5% coupon rate and semiannual payments. The bonds would mature in 15 years. The bonds would sell at par, but flotation costs would amount to 3.5% of par value. The firm has a 21% marginal tax rate. What is the firm's cost of debt financing