1) Erica has decided to change her investment strategy and wants to sell her shares in a closely held, all equity firm. The other shareholders have agreed to have the firm borrow $480,000 to purchase Erica's 12,000 shares of stock at the current market value. The total number of shares outstanding is 300,000. What will be the new price per share after the repurchase? Ignore taxes.

A)$38.00

B)$39.00

C)$40.00

D)$41.00

E)$42.00

2)Biogen is an all equity firm and has a cost of capital of 8.2 percent. The firm is considering switching to a debt-equity ratio of 1.80 with a pretax cost of debt of 6.4 percent. What will the firm's cost of equity be if the firm makes the switch? The tax rate is 25%.

A) 9.88%

B)10.20%

C)10.42%

D)10.63%

E)10.87%