Estimating the Cost of Debt CapitalKellogg Company manufactures cereal and other convenience food

under its many well$-$known brands such as Kellogg$$s$,$ Keebler$,$ and

Cheez$-$It$.$ The company, with over $$13\mathrm{.}5$ billion in annual sales

worldwide, partially finances its operation through the issuance of

debt. At the beginning of its $2015$ fiscal year, it had $$6\mathrm{.}7$ billion

in total debt. At the end of fiscal year $2015,$ its total debt had

increased to $$6\mathrm{.}8$ billion. Its fiscal $2015$ interest expense was

$$418$ million, and its assumed statutory tax rate was $37\%.$a$.$ Compute the company$$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: $0\mathrm{.}0345=3\mathrm{.}5\%).$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: $0\mathrm{.}0345=3\mathrm{.}5\%).$