1.....A firm is paying a 4% coupon interest rate for its outstanding bonds. All else constant, the higher the firm's tax rate: Select one: A. The higher its after-tax cost of debt B. The lower its after-tax cost of debt C. The after-tax cost of debt remains unchanged D. The answer cannot be determined with the information provided

2......Given an optimal capital structure that is 50% debt and 50% common stock, calculate the weighted average cost of capital for stone corp. given the following information:

Bond coupon rate 14%

Bond yield 10%

Dividend expected $5

Price common $100

Growth rate 8%

Corporate tax rate 30%

Select one:

A. 9.50%

B. 10.00%

C. 11.50%

D. 12.00%.