J&R Renovation, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is quoted at 104 percent of face value. The issue makes semiannual payments and has a coupon rate of 4 percent annually.

a). What is the company's pretax cost of debt? Pretax cost of debt             %

b). If the tax rate is 35 percent, what is the after-tax cost of debt? The after-tax cost of debt             %