Huxley Horticulture Ltd has $200,000 (face value) of 10-year bonds outstanding.  Each $1,000 bond carries a 5% coupon, paid semi-annually, and is currently selling in the market for $950.  They also have 100,000 common shares outstanding.  The shares just paid a dividend of $2.50.  The current yield on Treasury Bills is 2% and the return on the market 10%.  Field Farms has a Beta = 2, an ROE = 14%, a tax rate = 30% and a payout ratio = 60%.  

What is the cost of debt for Huxley Horticulture?

6.55%

4.77%

5.66%

7.44%

5.00%

What is the market value of Huxley Horticulture's debt?

$230,000

$210,000

$190,000

$200,000

$220,000

What is the required return on Huxley Horticulture's equity, computed using the CAPM?

19%

17%

16%

18%

15%

What growth rate does Huxley Horticulture expect, using the formula g =  ROE x Plowback

4.6%

6.6%

5.6%

6.0%

7.0%