The long-term debt of Loonie Bank is currently selling for 103 percent of its face value. The issue matures in 20 years and pays an annual coupon of 8 percent of face. The corporate tax rate is 40 percent. What is the after-tax cost of debt for Loonie Bank?

a. 3.08%

b. 4.62%

c. 4.80%

d. 7.70%

e. None of the above