Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is quoted at 99 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually.

Required

a. What is the company's pretax cost of debt? (Do not round your intermediate calculations.)

i. 5.82%, 6.20%, 6.43%, 6.13%, 6.37%

b. If the tax rate is 34 percent, what is the aftertax cost of debt? (Do not round your intermediate calculations.)

i. 2.71%, 4.25%, 3.84, 4.04%, 4.21%