The cost for renovating The O Resort will cost the owners $2,000,000. Currently, the owner plans to raise the money needed with a loan of $1,200,000 and finance the rest via equity. For the loan, The O is only able to commit to a coupon rate of 3% which is lower than the markets going rate, for a period of 8 years. Thus, the bond will be sold at a discount of $950. What is the after tax cost of debt if the tax rate is at 30%?