Avicorp has a $$11\mathrm{.}9$ million debt issue outstanding, with a $5\mathrm{.}8\%$ 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 $95\mathrm{.}56\%$ of par value.

a$.$ What is Avicorp's pretax cost of debt?

b$.$ If Avicorp faces a $40\%$ tax rate, what is its after$-$tax cost of debt? Note: Assume that the firm

will always be able to utilize its full interest tax shield.

Using Rate excel function, how to get $6\mathrm{.}86\%$

$($please show step by step solution$)$

a$.$ The cost of debt is $6\mathrm{.}86\%$ per year. $($Round to two decimal places.$)$

b$.$ If Avicorp faces a $40\%$ tax rate, the after$-$tax cost of debt is $4\mathrm{.}12\%.($Round to two

decimal places.$)$

$($please use excel rate function and don't use AI to solve this$)$