Weston Corporation, a US multinational, is considering building a new assembly plant in Thailand at a total cost of 300 million Baht to be financed with 50% debt and 50% equity. Managers plan to raise half of the new debt with the sale of bonds in the US paying 8% interest annually and principal repayment in five years. The other half of the new debt will come from the sale of bonds in Thailand paying 10% interest annually and principal repayment in five years. The current spot rate is 30 Baht/USD and the Baht is expected to appreciate against the dollar by 2% per year over the next five years. Westons marginal income tax rate is 30% in both the US and Thailand.

Q: Excluding floatation costs, what is Westons after-tax cost of debt for the project?