Avicorp has a $11.6 million debt issue outstanding, with a 5.8% 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 93% 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?
a. The cost of debt is % per year. (Round to four decimal places.)