Gul Corp. considers the following capital structure optimal: 40% debt; 50% equity; and 10% preferred stock. Guls bond currently sells in the market for $1150. The bond carries an annual coupon payment of 12 % of the face value which is paid in two semiannual payments. The bond will mature in 15 years and its face value is $1000. The bond's annual yield to maturity is 10.04%. The firms marginal tax rate is 40 percent. What is Gul's after-tax annual cost of debt?

	1.	cannot be determined without additional information
	2.	6.025%
	3.	10.04%
	4.	2.41%
	5.	5.021%