Suppose a company has 15,000 7% coupon bond outstanding. these bonds have 15 years to maturity and are selling for 92% of par. Each bond has 1000 par value and makes semiannual payments. if the tax rate is 35%, then the after-tax cost of debt is?"

1) 5.5%

2) 3.96%

3) 7.92%

4) 7.00%

5) None of these