Sarah Stores has two bond issues outstanding. The first issue has a coupon rate of 9%, matures in 4 years, has a total face value of $10 million, and is quoted at 109% of face value. The second issue has a 7% coupon, matures in 11 years, has a total face value of $22 million, and is quoted at 101% of face value. Both bonds pay interest semi-annually. What is the weighted average after-tax cost of debt if the tax rate is 35 percent?

A.

4.71%

B.

4.37%

C.

5.44%

D.

5.01%