Questions $12-14$ are based on the following information

The firm's combined marginal state, local, and federal tax rate was $40\%.$ The $10-$year Treasury bond rate $1$s $5\%$ and the borrowing rate for companies exhibiting levels of creditworthiness similar to No Growth is $7\%.$ The historical risk premium for stocks over the risk free rate of return is $5\mathrm{.}5\%.$ The firm's beta was estimated to be $1\mathrm{.}0.$ The firm's debt to equity ratio is $50\%.$

$12$ What is the after$-$tax cost of debt of this firm?

$2\mathrm{.}8\%$

b

$3\%$

d

$4\mathrm{.}2\%$

$5\%$

e

$7\%$

$13$ What is the cost of equity