Question1: Compute after-tax cost of a $25 million debt issue that a firm with a 40% marginal tax rate is planning to place privately with a large insurance firm. This long-term issue will yield 6.6% to the insurance co. Compute and describe.
Question2: Compute & describe the after-tax cost of preferred stock for a firm which is planning to sell $10 million of $4.50 cumulative preferred stock to the public at a price of $48 a share. Marginal tax rate id 40%.