The outstanding debt of Berstin Corp. has ten years to maturity, a current yield of

6%,

and a price of

$80.

What is the pretax cost of debt if the tax rate is

30%.

Note: The current yield of a bond is its annual coupon divided by its price.

A.

6%

B.

4.65%

C.

6.2%

D.

7.75%