Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 9 years to maturity that is quoted at 100 percent of face value. The issue makes semiannual payments and has an embedded cost of 9 percent annually.
Required
What is the company's pretax cost of debt? (Do not round your intermediate calculations.)
If the tax rate is 38 percent, what is the aftertax cost of debt? (Do not round your intermediate calculations.)