wilson's cabinets has bonds outstanding that mature in eight years, have a 6 percent coupon and pay interest annually. these bonds have a face value of $1,000 and a current market price of $1,020. what is the company's preminus tax cost of debt?

The common stock and debt of northern sludge are valued at $65 million and $35 million, respectively. investors currently require a return of 15.9% on the common stock and a return of 7.8% on the debt. if northern sludge issues an additional $14 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? assume that the change in capital structure does not affect the interest rate on northern’s debt and that there are no taxes.