Xavier Corporation is estimating its cost of bond financing. It has outstanding a $1,000 face value issue with an 11% coupon and 25 years to maturity. These bonds are currently selling for $1,141.56. Xavier would pay a 5% flotation cost to issue new, similar bonds and pays income taxes at a 21% rate.

Determine the cost of a new 25-year bond issue to Xavier Corporation

Group of answer choices

7.97%.

9.50%.

7.93%.

8.69%.