Calculate the after cost of debt capital for the following:

TRW creditors require a before tax cost of debt of 7.8 percent rate of return. TRW corporate income rate is 34 percent. What is there after tax cost of debt?

Calculate the average cost of capital for the following:

Source of capital        capitalstructure       before tax cost

Bonds                           35%                             7%

Preferred stock             5%                            13%

Common equity          60%                           14%

The tax rate is 34%