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Starset, Inc., has a target debt-equity ratio of .65. Its WACC is 8.1 percent, and the tax rate is 21 percent. If the companys cost

Starset, Inc., has a target debt-equity ratio of .65. Its WACC is 8.1 percent, and the tax rate is 21 percent. If the companys cost of equity is 12 percent, what is its pretax cost of debt?

Select one:

A. 3.11%

B. 2.66%

C. 2.10%

D. 2.35%

E. 7.04%

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