1. A piece of newly purchased industrial equipment costs $969,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in Table 10.7. Calculate the annual depreciation allowances and end-of-the-year book values for this equipment. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 2 decimal places. (e.g., 32.16))

Year	Beginning Book Value	Depreciation	Ending book Value
1 969000	$	$	$
2	$	$	$
3	$	$	$
4	$	$	$
5	$	$	$
6	$	$	$
7	$	$	$
8	$	$	$ 0

Suppose In a Found Ltd. just issued a dividend of $2.57 per share on its common stock. The company paid dividends of $2.10, $2.31, $2.38, and $2.49 per share in the last four years.

2. If the stock currently sells for $60, what is your best estimate of the company?s cost of equity capital using the arithmetic average growth rate in dividends? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

Cost of equity

%

What if you use the geometric average growth rate? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

Cost of equity

%

3. Mudvayne, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is quoted at 110 percent of face value. The issue makes semiannual payments and has an embedded cost of 8 percent annually.

What is the company?s pretax cost of debt? (Do not round intermediate calculation and round your answer to 2 decimal places. (e.g., 32.16))

Cost of debt

%

If the tax rate is 35 percent, what is the aftertax cost of debt? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

Cost of debt

%