Tobin's Barbeque has a bank loan at 10% interest and an after-tax cost of debt of 4%

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Tobin's Barbeque has a bank loan at 10% interest and an after-tax cost of debt of 4%. What will the after-tax cost of debt be when the loan is due if a new loan is taken out yielding 11%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

OPTIONS BELOW:

Multiple Choice

• 4.40%

• 9.45%

• 1.85%

• None of these options are true.