You are required to show the following 3 steps for each problem (sample questions and solutions are provided for guidance): (i) Describe and interpret the assumptions related to the problem. (ii) Apply the appropriate mathematical model to solve the problem. (iii) Calculate the correct solution to the problem. Submit all answers as percentages and round to two decimal places.

1. Monted Inc. $1,000 par value corporate bonds mature in 12 years and sell in the market for $940. The bonds offer a coupon rate of 5%, paid semiannually. Flotation costs on newly issued bonds are $50 per bond. The corporation is in the 35% tax bracket. What is the companys pre-tax cost of debt on the newly issued bonds?
2. Ezally Corp. is investing in a new machine that will be financed by issuing new 25-year, $1,000 par, 6% semiannual coupon bonds. The bonds are currently selling in the market for $980. Flotation costs on newly issued bonds are $80. The corporations marginal tax rate is 35%. What is the post-tax cost of debt for the newly-issued bonds?