1. Boulder Furniture has bonds outstanding that mature in 15 years, have a 6 percent coupon, and pay interest annually. These bonds have a face value of $1,000 and a current market price of $1,075. What is the company's aftertax cost of debt if its tax rate is 32 percent?

a. 3.58%

b. 5.53%

c. 5.21%

d. 2.97%

2. The cost of preferred stock is computed the same as the:

a.cost of an irregular growth common stock.

b.return on a perpetuity.

c.aftertax cost of debt.

d.pre-tax cost of debt.

e.return on an annuity.

3.Jack's Construction Co. has 100,000 bonds outstanding that are selling at par value. The bonds yield 10.0 percent. The company also has 4.5 million shares of common stock outstanding. The stock has a beta of 1.7 and sells for $45 a share. The U.S. Treasury bill is yielding 4 percent and the market risk premium is 7 percent. Jack's tax rate is 35 percent. What is Jack's weighted average cost of capital?

a.13.75 percent

b.8.50 percent

c.12.79 percent

d.6.40 percent

e.10.64 percent