BMW plans to launch a new bike model and for that purpose the company will issue bonds to finance the project. Bank of America, a prestigious investment bank, is the advisor and underwriter of BMW in that financial operation. Bank of America analysts suggest a bond issuance whose entire nominal will be 124,0 M (million) and a 6,2% annual coupon. Bank of America will charge BMW with a 1,4% on the operation, only for the first year.

1. What will the actual cost of the debt issuance be for the first year?
2. If BMW must pay 40% taxes on income, compute the after-tax cost of the debt issuance (bank fees included).