What is the firm pretax cost of debt

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1. Scite Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 2 years to maturity that is quoted at 105 percent of face value. The issue makes annual payments and has a coupon rate of 8.9 percent annually. What is the firm's pretax cost of debt? (Enter answer in percents.)

2. Borkshire Castaway has preferred stock outstanding that is currently selling for $54.49 a share and pays a dividend of $3.1 per share. The rate of return on the market portfolio is 8.97 percent, the risk free rate is 4.5 percent, and the firm's tax rate is 32 percent. What is Borkshire's cost of preferred stock? Enter answer in percents.

Reference no: EM132050643

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