Several Years Ago the Jakob Company Sold a $1,000 Par

Several years ago the Jakob Company sold a $1,000 par value,noncallable bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually.The bond currently sells for $875,and the company's tax rate is 40%.What is the component cost of debt for use in the WACC calculation? Do not round your intermediate calculations.

A) 4.58%
B) 4.97%
C) 3.78%
D) 4.92%
E) 5.87%