1. Wind Power Systems has 20-year, semi-annual bonds outstanding with a 5 percent coupon. The face amount of each bond is $1,000. These bonds are currently selling for 114 percent of face value. Its tax rate is 40%. What is the company's before tax (pre-tax) cost of debt (r d)?

3.98 percent

4.42 percent

4.71 percent

5.36 percent

2.39 percent