Jiminy's Cricket Farm issued a 30-year, 8 percent semi-annual bond 7 years ago. The bond currently sells for 84 percent of its face value. The book value of the debt issue is $19 million. The company's tax rate is 34 percent.

In addition, the company has a second debt issue on the market, a zero coupon bond with 7 years left to maturity; the book value of this issue is $84 million and the bonds sell for 79 percent of par.

What is your best estimate of the aftertax cost of debt? (Do not round your intermediate calculations.)

a. 3.59%

b. 2.31%

c. 3.05%

d. 3.42%