need help with 1 and 2

(The following information applies to the next five problems.) Sail, Inc. is trying to determine its optimal capital structure The chief financial officer has obtained estimates of the before tax cost of debt (ra) from the firm's investment banker. She has estimated the common stock beta for each level of debt and has partially completed the worksheet below The firm's marginal tax rate is 40%, the market return (a) is 10%, and the risk-free rate of return (rar) is 6% Capital Structure Cost of Debt Cost of Equity Cost of Capital (before tax) DIA (6) (b) W (WACC) D 7.0% 1.50 12.00% 12.00% 0.20 8.0% 12:92% 11.30% 0:30 90% 1.89 13.54% 0:40 11.04% 10.0% 2:10 0:50 11.0% 2:40 15.60% 2.85 12.0% 17.40% 11:28% 6.60 Question 1 (1 point) If the firm's debt level (D/A) is 40%, what is the firm's cost of equity? Previous Page Next Page Question 2 (1 point) If the firm's debt level (D/A) is 30%, what is the firm's after-tax cost of debt? A) 3,60% Page 2 of 39 B) 5,40% C) 6.00% D) 7.20 % E) 12.00% Previous Pag Next Page Page 2 of 39