(2)

(Computing the cost of debt) The Shiloh Corporation is contemplating a new investment that it plans to finance using one-third debt. The firm can sell new $1,000 par value bonds with a 15-year maturity and a coupon interest rate of 13.8 percent (with interest paid semiannually) at a price of $950. If the company is in a 34 percent tax bracket, what is the after-tax cost of capital for the bonds?

The after-tax cost of debt is _____%. (Round to two decimal places.)