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The treasurer of Rley Coal Company is asked to compute the cost of fxed income secunties for her corporaton Even before making the caiculations, she

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The treasurer of Rley Coal Company is asked to compute the cost of fxed income secunties for her corporaton Even before making the caiculations, she ascumes the aftertax cost of debt is at least 2 percent less than that for preferred stock. Debt can be issued at a yleld of 13.6 petcent, and the corporate tax rate is 25 percent. Preferred stock will be priced at $51 and pay a dividend of 5580 . The flotation cost on the preferred stock is $2 0. Compute the aftertax cost of debt. Note: Do not round intermediote calculodions: Input your answer as a percent rounded to 2 decimal ploces. b. Compute the aftertax cost of preferred stock Note: Do not round intermediate colculations. Input your answer as a percent rounded to 2 decimal places. c. Eased on the facts given above, is the treasurer correct? Yes, the treasurer is correct No, the treasure is incorrect

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