A8. (Cost of private placement versus public offering) Base Metal Company is considering two debt financing alternatives shown here. What is the cost of funds from each

(Calculate the yield to maturity assuming semiannual compounding)

Private placement: 20-year maturity, 8.20% coupon paid semiannually, offering price 100% of face value, and issuing costs = 1.5% of the offering price.

Public offering: 20-year maturity, 8.00% coupon paid semiannually, offering price 100% of face value, and issuing costs = 4.0% of the offering price.

B12. (cost of preferred stock) A perpetual preferred stock issue can be sold for $25 per share would require a quarterly dividend rate of @0.50 per share. The underwriting fend out of pocket expenses amount to 1.75% of the public offering price. What is the cost of preferred stock?