Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $875 and the companys tax rate is 25%. What is the component cost of debt for use in the WACC calculation? Do not round your intermediate calculations.

Group of answer choices

5.02%

6.22%

5.92%

4.92%