1) 204. A firm has three bond issues outstanding as shown below. Based on this information what is the weighted average cost of debt? Market value Coupon Rate Yield to Maturity $500,000 8.00% 7.20% $600,000 7.00% 8.40% $900,000 6.00% 7.80%

2) Hometown Industries has paid annual dividends of $2.00, $2.08, $2.15, and $2.25 per share over the last four years, respectively. The stock is currently selling for $46.80 a share. What is this firm's cost of equity? A. 7.14 % B. 7.67 % C. 8.39 % D. 8.56 % E. 9.01 %