The balance sheet of XYZ Corporation is shown below. XYZ Corporation ASSETS Total Assets December 31 LIABILITIES Accounts Payable $3,000,000 Bond $7,000,000 Preferred Stock $3,000,000 Common Stock and Retained Earnings $7,000,000 Total Liabilities and $20,000,000 Equity $20,000,000 You are also given the following information: . Expected growth rate of common stock dividend is 4%. .XYZ's new bonds will have 20-year maturity, a coupon rate of 8% (quarterly coupon payment), and face value of $1,000. Net proceeds from new bonds will be $952.12. The current bond is selling for $975. . The common stock of XYZ is selling for $28.00 per share in the market. New common stock floatation cost will be 6%. . Company recently paid a common stock dividend of $2.50 per share, and 300,000 shares are outstanding. . New preferred stock with a dividend of $7.50 per share will be sold to net $70.00 per share. XYZ's current preferred stock is selling in the market at $75.00 per share, and 30,000 shares are outstanding. Corporate tax rate is 25%. The company needs to expand assets by $10 million in the coming year. Addition to retained earnings for the year will be $1.4 million. The company wishes to maintain the present capital structure based on market values. The current capital structure is optimal. Note: Some answers are rounded. What is the after-tax cost of debt (bond) for new financing by XYZ?