Estimating the Cost of Debt Capital tax rate was $37\%.$

a$.$ Compute the company's average pretax borrowing cost. $($Hint: Use the average amount of debt as the denominator in the computation.$)$

Round your answer to one decimal place $($ex: $0\mathrm{.}0345=3\mathrm{.}5\%).$

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b$.$ Assume that the book value of its debt equals its market value. Then, estimate the company's cost of debt capital.

Round your answer to one decimal place $($ex: $0\mathrm{.}0345=3\mathrm{.}5\%).$

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