Saras Sausages issued ten-year bonds at par last year at an interest rate of 6 percent. If they were issued today, they would have to pay a 7% interest rate. The firm also has a two-year credit line with a bank that has a 4.5% interest rate. There are no other debt issues. What is the firms cost of debt that would be used in a WACC calculation?

• A : the weighted average of 7% and 4.5%

• B : 6%

• C : 7%

• D : the weighted average of 6% and 4.5%