Silver Photo Studios Inc

Silver Photo Studios Inc.requires $50,000 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.