Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is quoted at 109 percent of face value. The issue makes semiannual payments and has an embedded cost of 8 percent annually.

Required:

(a)	What is the company's pretax cost of debt? (Do not round your intermediate calculations.)
	(Click to select) 7.02% 8.20% 7.09% 6.75% 6.41%

(b)	If the tax rate is 34 percent, what is the aftertax cost of debt? (Do not round your intermediate calculations.)
	(Click to select) 4.63% 4.45% 4.23% 4.03% 4.68%