Avicorp has a $ 11.6 million debt issue outstanding, with a 5.9 % 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)

B. If avicorp faces a 40% tax rate, the after-tax cost of debt is __ % (Round to four decimal places)