1. Calculate the after-tax cost of a 25 million debt issue that will yield 9.375 percent. The tax rate is 40%.

#2. 1. Suppose stock in Boone Corporation has a beta of 0.9. The market risk premium is 7 percent, and the risk-free rate is 8 percent. What is Boones cost of equity capital? 2. In addition to the information in the previous problem, suppose Boone has a debt-equity ratio of 50 percent. Its cost of debt is 8 percent, before taxes. If the tax rate is 34 percent, what is the WACC? (Debt-Equity ratio=total debt / total equity)