Question $1$

$12$

Pet.com can issue a $10-$year bond that pays a $5\%$ coupon rate with a $$1,000$ par value, and the coupons are paid semi$-$annually. The bond is priced at $$980$ when first issued. If the company's tax rate is $30\%,$ its after$-$tax cost of debt is closest to

$5\mathrm{.}26\%$

$1\mathrm{.}84\%$

$3\mathrm{.}68\%$

$2\mathrm{.}63\%$