Harry's Golf Accessories Inc. sold a $1,000 par value, noncallable bond a few years ago that now has the following characteristics:

1. 20 years to maturity

2. 7.00% annual coupon that is paid annually

3. Current price = $925

Harry's tax rate is 40%. What is the component cost of debt for use in the WACC calculation?

Group of answer choices

3.10%

4.20%

4.65%

4.87%

3.88%