A firm has a capital structure of 30% debt and 70% equity. New bonds will have an after tax cost of 7.5% and the shareholders require a return on their investment of 18.5%. Assuming that the firm will not need to sell new shares, what is their weighted average cost of capital?

A. 15.20%

B. 21.00%

C. 26.00%

D. 10.80%

A firm's new bonds will have a 13% current yield. The current price of common shares is $40.00; the most recent dividend (D0) was $2.00. The firm's tax rate is 35%. The firm is expected to grow at 9% for the foreseeable future. What is their cost of debt?

13.00%

B. 8.45%

C. 5.00%

D. 4.55%