Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years to maturity and a 9.00% annual coupon that is paid semiannually. The bond currently sells for $925, and the company's tax rate is 25%. What is the component cost of debt for use in the WACC calculation? Do not round your intermediate calculations.

a. 7.40%

b. 7.66%

c. 4.93%

d. 9.87%

e. 4.21%