K Avicorp has a $11.9 million debt issue outstanding, with a 6.2% 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 93.94% of par value. a. What is Avicorp's pretax cost of debt? b. If Avicorp faces a 30% tax rate, what is its after-tax cost of debt? Note: Assume that the firm will always be able to utilize its full interest tax shield. a. The cost of debt is % per year. (Round to two decimal places.)

Avicorp has a $11.9 million debt issue outstanding, with a 6.2% 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 93.94% of par value. a. What is Avicorp's pretax cost of debt? b. If Avicorp faces a 30% tax rate, what is its after-tax cost of debt? Note: Assume that the firm will always be able to utilize its full interest tax shield. a. The cost of debt is \% per year. (Round to two decimal places.)