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Problem $10\mathrm{.}025-$ The company's effective tax rate

A company that makes several different types of skateboards, Jennings Outdoors, incurred interest expenses of

$$1200000$ per year from various types of debt financing. The company received $$16300000$ in year $0$ through the sale of

discounted bonds with a face value of $$20,000,000.$ The company repaid the principal of the loans in year $15$ in a

lump sum payment of $$20,000,000.$ The company's effective tax rate is $38\mathrm{.}00\%.$

Problem $10\mathrm{.}025.$a $-$ Calculate before$-$tax cost of debt capital for a bond investment

What was Jennings' cost of debt capital before taxes? $($Round the final answer to three decimal places.$)$

The Jennings' cost of debt capital before taxes is