Radek Corp (continued):

Total assets $8,731

Interest-bearing debt $4,239

Average borrowing rate for debt 10.0%

Common equity:

Book value $3,130

Market value $16,284

Marginal income tax rate 35%

Market equity beta 1.33

Using the information in the table calculate Radek's cost of debt capital.

Group of answer choices

3.50%

13.30%

6.50%

10.00%