1. BP Corp. has $200 million dollars of interest-bearing debt outstanding at the end of fiscal 2017 year. In addition, the company incurred $20 million dollars of interest expense in 2017. If the company has a marginal tax rate of 35% calculate BPs after-tax cost of debt capital.

2. Carma Corp. currently pays a dividend of $2.00 per share. In addition, Carmas market beta is 2.0 when the risk free rate is 10% and the expected market risk premium is 5%. Estimate the intrinsic value of Carma Corp. using the dividend discount model assuming that the dividends will be $2.00 for the next 2 years and then will grow at a constant rate of 10%.