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Wail Inc. currently has 130,000 shares of stock outstanding with a market price of $36 a share. Wail's next year's projected dividend is $4.5 and its estimated longterm growth rate is 5%. Its outstanding debt consists of 4,560 coupon bonds each with a face value of $1,000, maturity of five years, and an annual coupon rate of 9% with semi-annual payments. The bonds are traded at par. The tax rate is 40 percent. What is Wail's pre-tax cost of debt? 4.5% 5.4% 5% 17.5% 9%