4a. A company's outstanding 20-year, annual-pay 6% coupon bonds are selling for $894 with a face value of $1000. At a tax rate of 40%. Calculate the companys after tax cost of debt.

4b. Two stocks, A and B, on the stock market have beta of 0.45 and 1.5 respectively. If the average return on the market is 7% and the risk-free rate is 5%;

ai) Which stock is more volatile to market conditions?

b) Which stock would be compensated higher for market risk?

c) Given that the average return on A and B are 8% and 7% respectively, which of the stocks is undervalued and which is overvalued