1. Growfast Construction has preferred stock outstanding that pays a dividend of $2.41per year. The current market price of the preferred stock is $28. What is the cost of preferred stock to Growfast?
2. Calculate the after-tax cost of debt for the following bond. The face value of the bond is $1,000, interest is paid annually, the coupon rate is 14 % and the bond matures in 25 years. Assume that the corporate tax rate is 25%. When the bond was issued it sold for a price of $1,140. what is the after-tax cost of debt for the bond ?