The treasurer of Riley Coal Co. is asked to compute the cost of fixed income securities for her corporation. Even before making the calculations, she assumes the after tax cost of debt is at least 4 percent less than that for preferred stock.

Debt can be issued at a yield of 10.0 percent, and the corporate tax rate is 40 percent. Preferred stock will be priced at $58 and pay a dividend of $5.40. The flotation cost on the preferred stock is $5.

Compute the after tax cost of debt.(Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Compute the after tax cost of preferred stock.