Calculate the after-tax cost of a $25 million debt issue that Pullman Manufacturing Corporation (40 percent marginal tax rate) is planning to place privately with a large insurance company. This long-term issue will yield 6.6 percent to the insurance company.

Calculate the after tax cost of preferred stock for bozeman- western airlines inc. which is planning to sell 410 million of 44.50 cumulateive preferred stock to the public at a price of 448 a share. The company has a marginal tax of 40 percent.