Sunny corporation issues bonds with a par value of $1000 and 5.5% coupon rate, 20 years left to maturity, and the price of these bonds is someone at $1120. The company's tax rate is 25%.

1. what is the pretax cause of debt of the company?

2. What is the after-tax cost of debt of the company?

Southern Wear stock is expected to lose 8 percent in a recession and earn 5 percent and 22 percent in a normal economy and boom, respectively. The probabilities of a recession, a normal economy, and a boom are 12 percent, 77 percent, and 11 percent, respectively. What is the expected return on this stock? (1) What a