Holmes outstanding bonds have an 8.5% annual coupon payment and will mature in 10 years. The bonds are currently selling for $957.50 If the company can issue new bonds at par with similar YTM, what is Holmes before-tax cost of debt? If Holmes marginal tax rate is 25%, what is Holmes after-tax cost of debt?

8.84% ; 6.63%

8.50% ; 6.38%

9.17% ; 6.88%

9.45%; 7.09%

10.05% ; 7.54%