Avicorp has a $ $10\mathrm{.}2$ million debt issue$$outstanding$,$ with

a $5\mathrm{.}8\%$ coupon rate. The debt has$$semi$-$annual coupons, the

next coupon is due in six$$months$,$ and the debt matures in

five years. It is currently priced at $95\%$ of par value.a$.$ What is$$Avicorp$\text{'}$s pre$-$tax cost of$$debt$?$ Note:

Compute the effective annual return.b$.$ If Avicorp faces a $40\%$ tax$$rate$,$ what is

its$$after$-$tax cost of$$debt$?$Note: Assume that the firm will always be able to utilize its

full interest tax shield.$$a$.$ The cost of debt is$\%$per

year.$($Round to four decimal$$places$.)$b$.$ If Avicorp faces a$40\%$ tax$$rate$,$ the$$after$-$tax

cost of debt is$\%.($Round to four

decimal$$places$.)$