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Abbot Corporation is a real estate developer looking to build a new property in the Metro Vancouver area. In order to do so , they

Abbot Corporation is a real estate developer looking to build a new property in the Metro Vancouver area. In order to do so, they need to raise capital to finance the construction. The company has investigated two alternatives:
Issue $81 million 10-year bonds, with an 8% coupon per annum. The company can buy them back on the open market at the end of 5 years; analysts estimate that it would cost $87,000,000 to reacquire the $81 million dollar issue. The market rate is 6.5%.
Issue $81 million of preferred shares at par. The shares can be redeemed at the companys option at the end of 5 years for a price estimated to be in the region of $85,000,000. Annual (cumulative) dividends are set at 6.75%.
Required:
1. Provide journal entries to record issuance, annual dividends, or interest (for one year only) of both the shares and debt. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)
2. Assume Abbots tax rate is 30%. What is the after-tax annual cost of the various alternatives?
3. This part of the question is not part of your Connect assignment.

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