Hillbilly co. is planning to issue new bonds. The bonds will carry an 11% coupon rate (paid annually) and will have 30 years until maturity. Investors buying the bonds will pay $940. The investment bank helping float the issue will keep $50 per bond. HIllbilly is in the 30% tax bracket. Which of the following is closet to HIllbilly's after-tax cost of borrowing?

a) 3.72% b) 5.43% c)8.68% d)12.41%