The company is considering issuing long-term debt. The debt woould have a 30 yr maturity and a 12% annual coupon rate, with coupon payments paid semi-annually. In order to sell the issue, the firm's $1,000 par value bonds must be sold at a discount of 2.5% of the par value. in addition the firm would have to pay flotation or issuance costs of 2.5% of the par value. The firm's corporate tax rate is 40%. What is the after tax cost of debt?
a)12.65%
b)6.32%
c)3.79%
d) 7.59%