Verizon Wireless (VZ) has 7 percent bonds outstanding that will mature in 5 years. The bonds pay interest semiannually and have a face value of $1,000. Currently, the bonds are selling for $980 each. Verizon pays a 21% corporate tax rate. [Chap 14]

A. What is Verizons after-tax cost of debt?

B. If you had any data you wanted, describe how you could calculate Verizons cost of equity financing? Be aware that VZs dividend is growing slowly at only 2.9% per year over the past 4 years.