1) Red Mountain Inc. has 35,000 bonds outstanding that are currently quoted at $990 per bond. The bonds mature in 11 years, have a $1,000 face value, and carry a 9 percent coupon with semi-annual payments. What is the firm's after-tax cost of debt if the applicable tax rate is 40 percent? Show calculations.

2) Worth While Entertainment has an expected return of 14.2%, the risk free rate is 5.5% and the market risk premium is 6.9% What must the beta of this stock be? Show calculations.