Hello,

If you could please help me answer the following question, that would be much appreciated. The homework assignment is due within the next hour, so your help would be a life-saver (the other questions on this assignment are also posted).

2. 15 Points. In the Cargo Transport case, page 2: "Ms. Thorp was immediately questioned as to the cost of the debt issue, since her figures did not include the annual payment to the sinking fund. One director argued that this represented 8% of the average size of the bond issue over its 15-year life, and he felt that the stock issue had a smaller cost than the bonds." This member believes that the cost of debt is 18%: 8% above plus the 10% interest rate on the debt. In a memo of no more than 70 words (count to make certain): Explain where he is incorrect and provide the correct cost. Assume the same details as when we went over this case in class 2. 15 Points. In the Cargo Transport case, page 2: "Ms. Thorp was immediately questioned as to the cost of the debt issue, since her figures did not include the annual payment to the sinking fund. One director argued that this represented 8% of the average size of the bond issue over its 15-year life, and he felt that the stock issue had a smaller cost than the bonds." This member believes that the cost of debt is 18%: 8% above plus the 10% interest rate on the debt. In a memo of no more than 70 words (count to make certain): Explain where he is incorrect and provide the correct cost. Assume the same details as when we went over this case in class