The tressure rof Riley Coal Company is soled to compute the cost of fived income securities for her corporation. Even before

making the cakulstions, she sosumes the aftentax cost of debt is at kast $2$ percent less than that for preferred stock.

Debt can be issued at a yield of $8\mathrm{.}5$ percent, and the corporste tax rate is $25$ percent. Preferred stock will be priced at $$70$ and

pay a dividend of $$5\mathrm{.}50.$ The flotation cost on the preferred stock is $$3.$

a Compute the aftertax cost of debt.

Note: Do not round Intermedlate calculations. Input your answer ~~ a percent rounded to $2$ decimal places.

b$.$ Compute the aftertax cost of preferred stock.

Note: Do not round Intermedlate calculations. Input your answer $6$ a percent rounded to $2$ decimal places.

c$.$ Bsed on the facts given above, is the tressure correct?

Yes, the tressurer is correct.

No$,$ the tressurer is incorrect.