Question 1.

Black Hill Inc. sells $100 million worth of 21-year to maturity 8.91% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $988 for each $1,000 bond. What is the before-tax cost of capital for this debt financing?

Answer is 9.04%

Question 2.

Great Seneca Inc. sells $100 million worth of 19-year to maturity 9.56% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $995 for each $1,000 bond. The firm's marginal tax rate is 35%. What is the after-tax cost of capital for this debt financing?

Answer is 6.25%

Please explain with formula