Shama's Tours Incorporated plans to issue a 20-year bond. Shama's Tours expects the $1000 par value bonds to sell for $995 each. Issuance costs are expected to be $5 per $1000 bond, and the coupon rate is 11.875 percent. If the effective tax rate is 40 percent, what is the after-tax cost of debt to Shama's Tours?

A.7.21%

B.5.25%

C.7.24%

D.1.21%