You are a corporate finance analyst at a management consulting firm, which has been approached by a company for advice on its capital structure decisions. The company, Boston Turkey Inc., has been in existence for only two years, and its stock is currently trading at $25 per share (There are 110,000 shares outstanding.) The following are the most recent financial statements of the company: Income Statement Revenues $ 1,000,000 - Expenses $ 400,000 - Depreciation $ 100,000 EBIT $ 500,000 - Interest Expense $ 100,000 Taxable Income $ 400,000 - Tax $ 160,000 Net Income $ 240,000 Balance Sheet Assets Liabilities Property, Plant & Equipment $ 1,500,000 Accounts Payable $ 500,000 Land & Buildings $ 500,000 Long Term Debt $ 1,000,000 Current Assets$ 1,000,000 Equity $ 1,500,000 Total $ 3,000,000 Total $ 3,000,000 The debt is not traded, but its estimated market value is 152% of face (book) value. You can assume that the market risk premium is 5.5%. The treasury bill rate is 3.00% and the treasury bond rate is 6.25% beta 1.26 tax rate is 40% As general information, you have also collected data on interest coverage ratios, ratings and interest rate spreads, and they are summarized below: Rating Interest Cov. Ratio Spread over T-bond AAA 9.65 - 0.30% AA 6.85 -9.35 0.70% A+ 5.65 - 6.849 1.00% A 4.49 - 5.649 1.25% A- 3.29 - 4.489 1.50% BBB 2.76 - 3.289 2.00% BB 2.17 - 2.759 2.50% What is the current cost of equity? b. What is your best estimate of the current after-tax cost of debt? (The company is not rated currently) c. What is the current cost of capital using book value weights? d. what is the current cost of capital using market value weights?