The Baker Corporation is considering issuing a fixed rate (.08) preferred stock or a .10 debt:

a. The after corporate tax cost to Baker Corporation is ____% with debt ____ % with preferred stock

b. The after tax return to the corporate investor Insurance Company (taxed at .35)
____% ifthe .10 debt is purchased ____% if.08 preferred stock is purchased

c. For the .35 tax rate issuer to be indifferent with respect to relevant cost (with no risk differentials) if debt pays .10 the fixed rate ofthe preferred stock must be %.

d. For the corporate investor to be indifferent (with no risk differentials) if the debt pays .10, the preferred stock must yield ________ %.