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Avicorp has a $ 1 4 . 8 million debt issue outstanding, with a 6 . 2 % coupon rate. The debt has semi -

Avicorp has a $14.8 million debt issue outstanding, with a 6.2% 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
94% 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.)
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