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2. 3.12 points Telecom Systems can issue debt yielding 11 percent. The company is in a 35 percent bracket. What is its aftertax cost of debt? (Input your answer as a percent rounded to 2 decimal places.) Aftertax cost of debt valuec 3.12 points Airborne Airlines Inc. has a $1,000 par value bond outstanding with 10 years to maturity. The bond carries an annual interest payment of $112 and is currently selling for $860. Airborne is in a 30 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the risk and maturity date will be similar a. Compute the yield to maturity on the old issue and use this as the yield for the new issue. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Yield on new issue b. Make the appropriate tax adjustment to determine the aftertax cost of debt. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Aftertax cost of debt 3.12 points The treasurer of Riley Coal Co. is asked to compute the cost of fixed income securities for her corporation. Even before making the calculations, she assumes the aftertax cost of debt is at least 2 percent less than that for preferred stock Debt can be issued at a yield of 10.4 percent, and the corporate tax rate is 25 percent. Preferred stock will be priced at $61 and pay a dividend of $5.20. The flotation cost on the preferred stock is $7 a. Compute the aftertax cost of debt. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Aftertax cost of debt b. Compute the aftertax cost of preferred stock. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Aftertax cost of preferred stock c. Based on the facts given above, is the treasurer correct? Yes, the treasurer is correct No, the treasurer is incorrect