57 A private company's capital structure is composed of 65% in debt and 35% in equity. The company's single debt issue matures in seven years. To estimate the company's cost of debt, an analyst summarizes the following matrix of bond yields issued by companies with similar capital structures and credit quality:

Time to Maturity (Years)	Yield to Maturity (%)
Bond 1	5
Bond 2	8

The estimated company's cost of debt is closest to: