Silver Photo Studios Inc

Silver Photo Studios Inc. requires $50,000 of capital for a proposed expansion. Simon Silver, the company's president and CEO, is trying to decide whether to issue preferred shares with a fixed dividend rate of 5%, or to borrow from the bank at a rate of 7%. The company pays a corporate tax rate of 27%.
Required:
A) Determine the amount of corporate income that would be required to finance (i) the interest in the bank loan and (ii) the dividends on the preferred shares.
B) Calculate the actual cost (as a %) of the debt and the actual cost (as a %) of issuing the preferred shares.