1. If a corporation has an average tax rate of 40 percent, issues a debt of 5-year, 8 percent coupon, $1,000 par value bond. In order to sell the issue, the bonds must be underpriced at a discount of 2.5 percent of face value. In addition, the firm would have to pay flotation costs of 2.5 percent of face value. Calculate a) before-tax cost of debt b) after-tax cost of debt