Lippo In. reports the following capital structure on its balance sheet:

Debt$20 m,Preferred stock$ 10 m,Common stock $20 m

The debt has 10 years to maturity, carries a coupon rate of 6%, and sells at 86.58% of face value.The preferred shares have a face value of $100 each and pay an annual dividend of $11.They sell at $105 each. There are 1 million shares with a market price of $30 each.The stock has a beta of 1.2.The risk-free rate is 5%.Assume that the risk premium on the market portfolio is 6%.The tax rate is 40%.(Assume that flotation costs are negligible.)

What is the after-tax cost of debt