Q12.

The Goodsmith Charltable Foundation, which is tax-exempt, Issued debt last year at 9 percent to help finance a new playground facility in Los Angeles. This year the cost of debt is 15 percent higher; that is, firms that pald 11 percent for debt last year will be paying 12.65 percent this year. a. If the Goodsmith Charltable Foundation borrowed money this year, what would the aftertax cost of debt be, based on Its cost last year and the 15 percent increase? Note: Do not round Intermedlate calculations. Input your answer as a percent rounded to 2 decimal places. b. If the recelpts of the foundation were found to be taxable by the IRS (at a rate of 35 percent because of Involvement In political actlvitles), what would the aftertax cost of debt be? Note: Do not round Intermedlate calculations. Input your answer as a percent rounded to 2 declmal places