The is the interest rate that a firm pays on any new debt financing.

Omni Consumer Products Company $($OCP$)$ can borrow funds at an interest rate of $11\mathrm{.}10\%$ for a period of six years. Its marginal federal$-$plus$-$state tax rate is $25\%.$ OCP$$s after$-$tax cost of debt is $($rounded to two decimal places$).$

At the present time, Omni Consumer Products Company $($OCP$)$ has $5-$year noncallable bonds with a face value of $$1,000$ that are outstanding. These bonds have a current market price of $$1,050\mathrm{.}76$ per bond, carry a coupon rate of $10\%,$ and distribute annual coupon payments. The company incurs a federal$-$plus$-$state tax rate of $25\%.$ If OCP wants to issue new debt, what would be a reasonable estimate for its after$-$tax cost of debt $($rounded to two decimal places$)?($Note: Round your YTM rate to two decimal place.$)$

$5\mathrm{.}22\%$

$6\mathrm{.}53\%$

$7\mathrm{.}84\%$

$5\mathrm{.}88\%$