Following is a balance sheet and information about CGT Corp.. Assets Current assets $38,000,000 Net plant, property, and equipment $101.000.000 Total Assets $139.000.000 Liabilities and Equity Accounts payable $10,000,000 Accruals $9.000.000 Current liabilities $19,000,000 Lng term debt (40,000 bonds, $1,000 face value) $40.000.000 Total liabilities $59,000,000 Common Stock (10,000,000 shares) $30,000,000 Retained Earnings $50,000,000 Total shareholders' equity $80,000,000 Total liabilities and shareholders' equity $139,000,000 CGT stock is currently selling for $7.50 per share and CGT bonds are selling for $889.50 per bond. These bonds have a 7.25 percent annual coupon rate, with semi-annual payments. The bonds mature in twenty years. CGT's beta is 1.1. The yield on a 6-month Treasury bill is 3.5 percent and the yield on a 20-year Treasury bond is 5.5 percent. The expected return on the stock market is 11.5 percent, but the stock market has averaged 14.5 percent annually during the past twenty years. CGT is in the 40 percent tax bracket. 1 What is best estimate for the after-tax cost of debt for CGT? Calculate your answer in bond equivalent yield form (like the problems in the text book). a. 2.52% b. 1.20% C. 4.35% d. 5.04% e. 5.37% 2. a Using the CAPM approach, what is the best estimate of the cost of equity for CGT? 10.10% b. 12.10% 12.30% d. 15.40% 15.60% C. e