1. Consider the following equity and debt information:

Equity information

Total equity value = 400 million

beta = 1.3

market risk premium = 8%

risk-free rate = 5%

Debt information

Total bond value = $100 million

current bond price = 1100

coupon rate = 8% (semiannual coupons)

15 years to maturity

tax rate = 20%

The cost of equity is _______%. Round-off to one decimal place. E.g., if 24.67%, input 24.7, NOT 0.2.

2. The after-tax cost of debt is ________%.

Group of answer choices

10.17

7.03

6.87

5.53

8.67

9.46