Two years ago, a company issued \($20\) million in long-term bonds at par value with a coupon rate of 9%. The company has decided to issue an additional \($20\) million in bonds and expects the new issue to be priced at par value with a coupon rate of 7%. The company has no other debt outstanding and has a tax rate of 40%. To compute the company’s weighted average cost of capital, the appropriate after-tax cost of debt is closest to:

A. 4.2%.

B. 4.8%.

C. 5.4%.