Avicorp has a $$14\mathrm{.}8$ 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 $96\%$ of par value.

a$.$ What is Avicorp'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.$)$