1. What is the after-tax cost of the following preferred equity? The par value of the preferred share is $100 and the annual dividend is 7.5 %. The preferred shares have no stated maturity. The current market price of the share is $60. Assume that the corporate tax rate is 30%.
2. Tiny Tots has debt outstanding, currently selling for $ 820per bond. It matures in12 years, pays interest annually, and has a 7 % coupon rate. Par is $1,000, and the?firm's tax rate is 20%. What is the after-tax cost of debt?