Avicorp has a $ 10.9 million debt issue outstanding, with a 6.1 % 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 93 % of par value.

a. What is Avicorp's pre-tax cost of debt? Note: Compute the effective annual return. (round to 4 decimal places)

b. If Avicorp faces a 40 % tax rate, what is its after-tax cost of debt? (round to 4 decimal places)