To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has a 7.00% annual coupon, paid semiannually, sells at a price of $800, and has a par value of $1,000. If the firm's tax rate is 25%, what is the component cost of debt for use in the WACC calculation? Do not round your intermediate calculations.

a. 9.21%

b. 6.90%

c. 4.18%

d. 7.68%

e. 4.60%