The firm has 7,500 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7 percent coupon, pay interest semiannually, and mature in 8 years. The bonds are selling at 98 percent of face value. The company's tax rate is 34 percent. What is the firm's after-tax cost of debt?

3.42 percent

4.84 percent

5.53 percent

8.25 percent

9.66 percent