Jersey Company Inc is an Australian clothing company. They have 5 million common shares trading at $25 each, and bonds with a total face value of $100 million. The bonds have a maturity of 20 years and pay semiannual coupons at 5.5%. They are currently trading at 86% of par. Jersey has 0.1 million shares of 3.5% preferred stock with a face value of $100. The market beta of the company is 1.57, T-bills are currently yielding 4%, and average return on market index is 7%. The preferred stock sells for $45 a share. Jersey's tax rate is 30%. The company BEFORE tax cost of debt is: