1. What is this company's pre-tax r_D in year 2? Do not represent your number as a percent. Record your answer to three decimal places.

Balance Sheet	Year 1	Year 2
Total Assets	21,000.0	24,200.0
Liabilities
AP	5,250.0	5,500.0
Total Debt	3,150.0	4,400.0
Etc	----	----
Income Stmnt	Year 1	Year 2
Revenue	945.0	990.0
SGA	141.8	148.5
Interest	52.5	110.0
EBT	750.8	731.5
Etc	----	----

2. Company X has these debt liabilities:

$2.5MM bond maturing in 10 years, with IRR = 7%

$1.9MM, loan due in 3 years, with IRR = 5%.

What is the company's weighted average, pre-tax cost of debt capital, r_{D, tot}? Do not represent your number as a percent. Record your answer to three decimal places.

3. Zero Motorcycles takes out a $10MM loan, agreeing to pay 0.6MM interest at EOY 1 and at EOY 2, when it will repay the principal. The bank also charges Zero a fee of 5% "points" for this loan, payable at EOY 0 (at loan signing). 5% "points" means 5% of the principal amount of the loan. What is zero's pre-tax cost of debt capital (r_D) for this loan?

Hints: 1. r_D is the IRR of the loan, with all the loan's cash flows, including the fee. 2. You will need the quadratic equation, Excel, a financial calculator or trial and error to solve for r_D.

Round your answer to four decimal places.

4. Zanco has pre-tax rD of 8.84% on its one outstanding bond. The company has no other debt and its tax rate is 30%. What is the firm's post-tax cost of debt capital?

Round your answer to three decimal places.