7 A: The Holmes Company's currently outstanding bonds have a 9% coupon and a 10% yield to maturity. Holmes believes it c

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7A: The Holmes Company's currently outstanding bonds have a 9%coupon and a 10% yield to maturity. Holmes believes it could issuenew bonds at par that would provide a similar yield to maturity. Ifits marginal tax rate is 25%, what is Holmes' after-tax cost ofdebt? Round your answer to two decimal places.
B: Torch Industries can issue perpetual preferred stock ata price of $61.00 a share. The stock would pay a constant annualdividend of $5.50 a share. What is the company's cost of preferredstock, rp? Round your answer to two decimal places.