3 years ago Mickey's Mouse Emporium issued a bond with 10 years to maturity. The bond pays an annual coupon of 8 percent. The bond currently sells for 96 percent of its face value and has a yield to maturity of 8.78%. The companys tax rate is 35 percent. The book value of the debt issue is $50 million. 132

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In addition, Mickey's Mouse Emporium issued a zero coupon bond that yields 6.07% with 10 years left to maturity; the book value of this bond issue is $30 million, and the bonds sell for 55 percent of par.

What is the company's (after-tax) cost of debt based on the debts' market value? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of debt

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