Calculating the After-Tax Cost of Debt for XYZ Corp

The management of XYZ Corp is assessing its cost of debt. The firm recently issued a 10-year bond with a face value of $1,000, a coupon rate of 5%, and a current market price of $950. The firm expects a marginal tax rate of 30%. In addition, XYZ Corp is considering refinancing the bond in the near future due to prevailing interest rates. The management has come across various options to calculate the cost of debt.

Which of the following calculations provides the most accurate estimate of XYZ Corp's after-tax cost of debt based on the current market information?