Endless Sun Ltd needs $1,000,000 to finance a business expansion. They can raise the required funds by either borrowing from their bank at 7% interest or by issuing 50,000 preferred shares for $20 each. The shares will pay an annual dividend of $1.20 and the company has a tax rate of 30%. Calculate the after tax cost of both options and, based on your calculations, which option should the company use.