Noah Lott plc has issued 10% bonds that are redeemable at par in three years time.

Interest is paid annually, and the interest payment for the most recent year has just been paid. The current market price of the bonds is 103.2. The rate of tax is 25%.

Year	Discount rate at 5%	Discount rate at 10%
1	0.95	0.91
2	0.91	0.83
3	0.86	0.75

Using the discount rates given above and the IRR interpolation method, the cost of the bonds (to the nearest one decimal place) is:

A 5.7%

B 6.3%

C 7.5%

D 8.6%