XYZ Company estimates that its pre-tax cost of borrowing on a 5 year bond is 165 basis points (BP) over treasuries. The company has an AA rating on its debt. The current treasury rates are as follows: .2% 1.7% 1 year 5 years 10years 2.5% 20years 30 years 3,0% to maturity will the company have to pay to investors if it wants to 5 year money? (In other words, what is its pre-tax cost of borrowing)? A) W hat yield borrow . B) Draw the yield curve, labeling each axis. Note the company's spread over treasuries and pre-tax cost of borrowing on the graph. C) Ifthe company's marginal tax rate is 21%, what is the company's after tax cost of borrowing 5 year money? D) If the Real Risk Free rate is .6% over the ten year term, what is expected annual inflation over the next 10 years? E) Another company (ABC) has to pay investors a yield to maturity of 4% to borrow 5 year funds. Company (ABC) has a BBB rating on its debt. How much more than the Nominal Risk Free Rate will ABC Company have to pay investors? F) Compare Company XYZ's pre-tax cost of borrowing to that of Company ABC How much do their spreads over treasuries differ? Also explain why they differ