Burnwood Tech plans to issue some $60 par preferred stock with a 6% dividend. A similar stock is selling on the market for $70. Burnwood must pay flotation costs of 5% of the issue price. What is the...

Burnwood Tech plans to issue some $60 par preferred stock with a 6% dividend. A similar stock is selling on the market for $70. Burnwood must pay flotation costs of 5% of the issue price. What is the cost of the preferred stock?

Calculate the after-tax cost of debt under each of the following conditions:

a. Interest rate of 13%, tax rate of 0%

b. Interest rate of 13%, tax rate of 20%

c. Interest rate of 13%, tax rate of 35%