Franklin Mining Co. has 10-year, 8% annual coupon bonds outstanding. The bonds have a current market price of $885.54 and a face value (FV) of $1,000. If Franklin's marginal tax rate is 40%, what is...

Franklin Mining Co. has 10-year, 8% annual coupon bonds outstanding. The bonds have a current market price of $885.54 and a face value (FV) of $1,000. If Franklin's marginal tax rate is 40%, what is its relevant after-tax component cost of debt, ra (1 - T)?
6.27%
O 5.91%
O 9.85%
6.62%
6.90%
+
Franklin is considering issuing shares of perpetual preferred stock. The preferred stock would have a face value of $100 per share and pay a fixed annual dividend of $7.20 per share. The flotation cost associated with issuing this preferred stock is 8% of each share's face value. What is Franklin's cost of preferred stock (ro)?
7.50%
7.83%
8.48%
O 8.80%
O 9.00%