1. Santiago Enterprises currently outstanding 10-year 4% annual coupon bonds have price $922.78. The companys marginal tax rate is 35%. What is Santiagos after-tax cost of debt?
2. Hitchcock Snacks will issue common stock to the public for $40. The expected dividend next year is $2.00 per share and will grow at 6% thereafter. If the flotation cost is 10% of the issues gross proceeds, what is the cost of external equity?