Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 15 years to maturity that is quoted at 101 percent of face value. The issue makes semiannual payments and has an embedded cost of 10 percent annually.
Required:
(a) What is the company's pretax cost of debt? (Do not round your intermediate calculations.)
(b) If the tax rate is 34 percent, what is the aftertax cost of debt? (Do not round your intermediate calculations.)