Michaels is a levered firm with $55,000 of debt. Michaels pays tax at the rate of 30%. The firm faces EBIT scenarios of recession, normal, and boom. {Note: EBIT = earnings before interest and tax, $ Interest = dollar amount of interest owed on the debt, NIBT = net income before tax, NI = net income, EPS = earnings per share}. Assume that firms with zero or negative NIBT pay zero in tax. ..EBIT..$ INTEREST.. NIBTTAXES NI.EPS ----------------------------------------------------------------------------------- BOOM .$9,000.$4,400 NORMAL...... $1,137 RECESSION.$2,000........-$6.00 What coupon interest rate does Michaels pay on its debt?

	a.	5%
	b.	6%
	c.	7%
	d.	9%
	e.	8%