1.) A company has outstanding 20-year noncallable bonds with a face value of $1,000, an 11% annual coupon, and a market price of $1,294.54. If the company was to issue new debt, what would be a reasonable estimate of the interest rate on that debt? If the companys tax rate is 25%, what is its after-tax cost of debt?

a) Estimate of interest rate on new debt =____________ %

b) After-tax cost of debt =______________ %

2.) Firm A has 11 equally risky capital budgeting projects, each costing $29.608 million and each having an expected rate of return of 8.25%. Firm As retained earnings breakpoint is $296.08 million. The firms WACC using retained earnings is 8.0% but increases to 8.5% if new equity must be issued. The company invests in projects where the expected return exceeds the cost of capital. How much capital should Firm A raise and invest?Note: answer is in millions of dollars, enter only the number________________