You are analyzing the cost of debt for a firm. You know that the firms 14-year maturity, 8.6 percent coupon bonds are selling at a price of $960.86. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions.

(Note: Current YTM for the bonds is 9.10%)

1) What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate? (Round final answer to 2 decimal places, e.g. 15.25%.)

After-tax cost of debt is _____%.