Home Depot has a debt-equity ratio of .86. The firm's WACC is 7.11 percent and its levered cost of equity is 10.54 percent. What is the pretax cost of debt based on MM Proposition I with no taxes? \begin{tabular}{|l} \hline 7.12% \\ \hline 6.05% \\ \hline 4.25% \\ \hline 3.95% \\ \hline 3.12% \end{tabular}