QUESTION 1 Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd 9% as long as it finances at its target capital structure which calls for 51% and the rest in common equity. Its last dividend (DO) was $3.07 its expected constant future growth rate is 5.6%, and its common stock sells for $25.07. EEC's tax rate is 28%. What is EEC's cost of common equity? QUESTION 2 The Holmes Company's currently outstanding bonds have a coupon rate of 9.9%, and a yield to maturity of 9.4%. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 33%, what is Holmes' after-tax cost of debt