Laurel, Inc., has debt outstanding with a coupon rate of 5.9% and a yield to maturity of 7.2%. Its tax rate is 35%. What is Laurel's effective (after-tax) cost of debt? NOTE: Assume that the debt has annual coupons. Note: Assume that the firm will always be able to utilize its full interest tax shield.

Rumolt Motors has 13 million shares outstanding with a share price of $12 per share. In addition, Rumolt has issued bonds with a total current market value of $39 million. Suppose Rumolt's equity cost of capital is 10%, and its debt cost of capital is 5%. a. What is Rumolt's pre-tax WACC? b. If Rumolt's corporate tax rate is 21%, what is its after-tax WACC?