4) Omega Associates is looking to estimate its cost of capital for use in evaluating investment opportunities. Its 6.5% coupon, semiannual payment, 20 year maturity, S1000 par value bond currently trades at $980.94. Omega's sioo par value, 7.25% annual dividend paying preferred stock currently trades at $73.54. If it were to issue new securities, Omega anticipates additional flotation costs of about 3.5% of proceeds on debt, and 4.0% of proceeds on preferred stock. Omega's marginal tax rate is 21%. a) Compute Omega's before and after-tax cost of debt. b) Compute Omega's cost of preferred stock