1. Easton Limited Company intends to borrow $25,000 from the bond market at the rate of 18%. It also intends to issue preferred stock at the price of $206.25 per share and pay a dividend of $ 18.75 per share of preference stock. The company has negotiated with its stock broker to pay a 6.5% commission for the stock issue. The companys tax rate is 30%.

Calculate:

1. The cost of borrowing for Easton Limited.
2. The cost of Preference Stock.