Avicorp has a $13.5 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

94%

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)