1.The Holmes Company's currently outstanding bonds have a 10% coupon and a 13% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is Holmes' after-tax cost of debt? Round your answer to two decimal places.

2.The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 14%, its before-tax cost of debt is 10%, and its marginal tax rate is 40%. Assume that the firm's long-term debt sells at par value. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1,116. The firm has 576 shares of common stock outstanding that sell for $4.00 per share.

Assets. Liabilities And Equity

Cash$ 120. Accounts payable and accruals$ 10

Accounts receivable $240. Short-term debt $46

Inventories$ 360. Long-term debt $1,070

Plant and equipment, net $2,160. Common equity $1,754

Total assets$2,880. Total liabilities and equity$2,880

Calculate Paulson's WACC using market-value weights. Do not round intermediate calculations. Round your answer to two decimal places.