Avicorp has a $ 13.5 million debt issue outstanding, with a 5.8% 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's pre-tax cost of debt? Note: Compute the effective annual return.(Round to four decimal places.)

b. If Avicorp faces a 40% tax rate, what is its after-tax cost of debt?(Round to four decimal places.) Note: Assume that the firm will always be able to utilize its full interest tax shield.

Please write down the specific steps and processes, as well as the formulas needed for each step. including calculation process

Don't use a financial calculator