Bonds: The company issued 240,000 bonds. The bonds have a $1,000 face value with 6.5% coupons with annual payments, 20 years to maturity, and currently sell for $950. The marginal tax rate is 8%.

Equity: The company has 9,000,000 shares of (common) stock outstanding, selling for $75 per share. The company's beta is 1.25, the risk free rate is 1%, and the market risk premium is 9%.

2a.What percent of the company's financing is debt?

2b.What percent of the company's financing is equity?

Bonds: The company issued 240,000 bonds. The bonds have a $1,000 face value with 6.5% coupons with annual payments, 20 years to maturity, and currently sell for $950. The marginal tax rate is 8%.

Equity: The company has 9,000,000 shares of (common) stock outstanding, selling for $75 per share. The company's beta is 1.25, the risk free rate is 1%, and the market risk premium is 9%.

1. What is the after-tax cost of debt?

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