The before-tax cost of debt is the interest rate that a firm pays on any new debt financing. Blue Hamster Manufacturing (BHM) can borrow funds at an interest rate of 7.30% for a period of five years. Its marginal federal-plus-state tax rate is 35%. BHM's after-tax cost of debt is 4.75% (rounded to two decimal places). At the present time, Blue Hamster Manufacturing (BHM) has a series of twenty-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,181.96 per bond, carry a coupon rate of 13%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 35%. If BHM wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? 6.29% 5.59% 6.99% 8.39%