1. New Products, Inc. has bonds outstanding that mature in 5 years, have an 11 percent coupon, and pay interest annually. These bonds have a face value of $1,000 and a current market price of $1,250. What is the companys post-tax cost of debt if its tax rate is 21 percent?

1. 1.89 percent
2. 2.39 percent
3. 3.09 percent
4. 4.78 percent
5. 5.15 percent