To help finance a major expansion, Castro Chemical Company is planning to sell a 9% noncallable bond with 20 years to maturity. The bond has a par value of $1,000 and can be sold to public at a price of $1,126 today. The flotation cost on the bond would be 2.9% . If the firm's tax rate is 40%, what is the component cost of debt for use in the WACC calculation? Assume that the bonds pay coupon semi-annually.

5.33%

4.83%

4.35%

4.65%

5.08%