vicorp has a $10.1 million debt issue outstanding, with a 6.1% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 95% of par value.

a. What is Avicorp's pre-tax cost of debt?

b. If Avicorp faces a 40% tax rate, what is its after-tax cost of debt?