Boulder Furniture Has Bonds Outstanding That Mature in 13 Years

Boulder Furniture has bonds outstanding that mature in 13 years, have a 6 percent coupon, and pay interest annually. These bonds have a face value of $1,000 and a current market price of $1,040. What is the company's aftertax cost of debt if its tax rate is 32 percent?

A) 2.97 percent
B) 3.24 percent
C) 3.78 percent
D) 5.21 percent
E) 5.53 percent