Stancorp has a $10.9 million debt issue outstanding, with a 6.1% coupon rate. The debt has semi-annual coupons, with the next coupon is due in six months. The debt matures in five years. It is currently priced at 95% of par value.

a. What is Stancorp's pre-tax cost of debt? Note: Compute the effective annual return.

b. If Stancorp faces a 30% tax rate, what is its after-tax cost of debt?