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1) Luther Industries has 25 million shares of common stock outstanding, trading at $18 per share. In addition, Luther has bonds with a total face

Luther Industries has 25 million shares of common stock outstanding, trading at $18 per share. In addition, Luther has bonds with a total face value of $150 million. The bonds have 20 years to maturity, semi-annual coupon payments, an annual coupon rate of 7.5%, and each bond has a market price of $570. If Luther has a corporate tax rate of 21%, what is their effective (or "after-tax") cost of debt?

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