N ltd's long term debt currently consists of a single issue with aface value of $25 million and a remaining term to maturity of eight years. The issue carries a coupon rate of 6.9% but is currently priced with a yield to maturity of 5.8%. If flotation costs on new debt are 7% before tax, what isN's component cost of debt if its tax rate is 31%?

A) 4.21%

B)4.30%

c)5.80%

d)6.09%