1. What is the average cost of debt before tax for the last three years? Number % 2. What is the average tax rate for the last three years? Number % 3. What is the estimate of the cost of debt after-tax for 2023? Number % 4. Assuming that cost of equity is 10%, what is the estimate of the cost of capital for 2023? Number % Breakdown Net Debt Net Interest Income Implied cost of debt, kB Computing pretax cost of debt 2023 2022 2021 2020 27,453,000 25,141,000 20,966,000 20,388,000 -1,264,000 -846,000 -785,000 -735,000 4.81% 3.67% 3.80% 4.09% Average cost of debt, kB Computing the tax rate Breakdown Pretax Income 2023 1,089,000 2022 2,322,000 2021 2020 2,278,000 1,711,000 Tax Provision 222,000 604,000 580,000 451,000 Tax rate 20% 26% 25% Average tax rate, tc 23.95% After-tax cost of debt, kD 3.11% Computing the cost of capital Item Value Basic Average Shares 1,451,000 Average price, 2023 $23.88 Market value of equity, VE 25,141,000 Net debt, VD $27,453,000 Total capital, Vc $52,594,000 Weight of equity, WE 48% Weight of debt, WD 52% After-tax cost of debt, kD 3.11% Cost of equity, KE 10.00% Cost of capital, kc 6.40%