Organic Compound, Inc. is issuing a new series of bonds. Currently, its has existing bonds quoted at 108. They are $1000 face value, 5% semi-annual coupon bonds maturing in 17 years. Organic Compound will have to pay its investment banker a 2% commission upon issuance of the new bonds. What is this firm's cost of debt after accounting for flotation costs?

Organic Compound, Inc. is issuing a new series of bonds. Currently, its has existing bonds quoted at 108. They are $1000 face value, 5% semi-annual coupon bonds maturing in 17 years. Organic Compound will have to pay its investment banker a 2% commission upon issuance of the new bonds. What is this firm's cost of debt after accounting for flotation costs? a) 2.25% b) 2.30% c) 4.17% d) 4.50%