The Bet-r-Bilt Company has a 5-year bond outstanding with a 3.75 percent coupon. Interest payments are paid semi-annually. The face amount of the bond is $1,000. This bond is currently selling for 91 percent of its face value. What is the company's pre-tax cost of debt?

8.6 percent

2.2 percent

7.6 percent

5.9 percent

3.8 percent

Please explain!