1. Apple's 9 percent annual coupon bond has 10 years until maturity and the bonds are selling in the market for $890. The firm's tax rate is 36 percent. What is the firm's after-tax cost of debt?
2. You estimate that your cattle farm will generate $0.20 million of profits on sales of $4 million under normal economic conditions and that the degree of operating leverage is 4.
a. What will profits be if sales turn out to be $5.0 million?