1. Marginal Incorporated (MI) has determined that its after-tax cost of debt is 5.0% for the first $62 million in bonds it issues, and 7.0% for any bonds issued above $62 million. Its cost of preferred stock is 12.0%. Its cost of internal equity is 15.0%, and its cost of external equity is 19.0%. Currently, the firm's capital structure has $325 million of debt, $70 million of preferred stock, and $105 million of common equity. The firm's marginal tax rate is 45%. The firm's managers have determined that the firm should have $50 million available from retained earnings for investment purposes next period. What is the firm's marginal cost of capital at a total investment level of $333 million?

	8.92%
	9.38%
	8.08%
	10.22%
	8.17%
	7.33%
	6.62%
	7.46%

2. Marginal Incorporated (MI) has determined that its before-tax cost of debt is 5.0% for the first $198 million in bonds it issues, and 8.0% for any bonds issued above $198 million. Its cost of preferred stock is 11.0%. Its cost of internal equity is 16.0%, and its cost of external equity is 20.0%. Currently, the firm's capital structure has $310 million of debt, $30 million of preferred stock, and $160 million of common equity. The firm's marginal tax rate is 35%. The firm's managers have determined that the firm should have $73 million available from retained earnings for investment purposes next period. What is the firm's marginal cost of capital at a total investment level of $137 million?

	9.00%
	10.28%
	9.08%
	7.80%
	12.02%
	10.16%
	8.88%
	10.74%