The following information applies to the Coetzer Company:

Coetzer has 345,000 share of common stock outstanding at $50 a share. It also has bonds outstanding with a total face value of $10 million.

Coetzers has 10,000 bonds paying 12 percent semi annually with a 15-year maturity, and a current price of 115% for each bond.

Coetzers has 8,000 shares of 5.25 percent preferred stock outstanding, currently selling for $75 per share.

The risk-free rate is 5 percent. The market risk premium is also 5 percent.

Coetzers common stock has a beta of 1.4.

Coetzers tax rate is 40 percent.

1. What is the companys after-tax cost of debt?

2. What is the companys cost of preferred stock?