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Cost of debt.

Venus Inc. has a $$1,000$ par value bond outstanding with $7$ years to maturity. The bond carries an annual interest payment of $$70,$ payable semiannual, and is currently selling for $$810.$ Octopus is in a $38$ percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be$.$ The yleld to maturity on the new issue will be the same as the yield to maturity on the old issue because the risk and maturity date will be similar:

a$.$ Compute the yield to maturity on the old issue and use this as the yield for the new issue.

Number

$\%-$

Round your answer to two decimals.

b$.$ Determine the aftertax cost of debt.

Number

$\%$

Round your answer to two decimals.