The Backwoods Lumber Co$.$ has a debt$-$equity ratio of $\mathrm{.}80.$ The firm's required return on assets is

$10\%$ and its levered cost of equity is $15\mathrm{.}68\%.$ What is the cost of debt based on MM Proposition II with no taxes?

$6\mathrm{.}76\%$

$3\mathrm{.}5\%$

$2\mathrm{.}9\%$

$7\mathrm{.}4\%$

$7\mathrm{.}5\%$