In 2007 Beta Corporation earned gross profits of $760000. a. Suppose that i

In 2007 Beta Corporation earned gross profits of $760000.

a. Suppose that it is financed by a combination of common stock and $1 million of debt. The interest rate on the debt is 10% and the corporate tax rate is
35%. How much profit is available for common stockholders after payment of interest and corporate taxes?

b. Now suppose that instead of issuing debt Beta is financed by a combination of common stock and $1 million of preferred stock. The dividend yield on the
preferred is 8% and the corporate tax rate is still 35%. How much profit is now available for common stockholders after payment of preferred dividends and
corporate taxes?