Luther Industries has 25 million shares outstanding trading at $18 per share. In addition, Luther has $150 million in outstanding debt. Suppose Luther's equity cost of capital is 13%, its debt cost of capital is 7%, and the corporate tax rate is 40%.

Luther's after-tax debt cost of capital is closest to:

A) 7.0%

B) 4.2%

C) 5.4%

D) 9.8%