1. For year 20X1, Zero earns $30MM of EBIT. If the firm's tax rate is 30% and it pays 10% interest on $100MM of debt, what is its NI for 20X1? Assume the firm's Taxable Income is equal to its EBT.

Round your answer to one decimal place.

2. What is this company's pre-tax r_D in year 2? Do not represent your number as a percent. Record your answer to three decimal places.

Balance Sheet	Year 1	Year 2
Total Assets	21,000.0	24,200.0
Liabilities
AP	5,250.0	5,500.0
Total Debt	3,150.0	4,400.0
Etc	----	----
Income Stmnt	Year 1	Year 2
Revenue	945.0	990.0
SGA	141.8	148.5
Interest	52.5	110.0
EBT	750.8	731.5
Etc	----	----

3. Company X has these debt liabilities:

$2.5MM bond maturing in 10 years, with IRR = 7%

$1.9MM, loan due in 3 years, with IRR = 5%.

What is the company's weighted average, pre-tax cost of debt capital, r_{D, tot}? Do not represent your number as a percent. Record your answer to three decimal places.

4. Zero Motorcycles takes out a $10MM loan, agreeing to pay 0.6MM interest at EOY 1 and at EOY 2, when it will repay the principal. The bank also charges Zero a fee of 5% "points" for this loan, payable at EOY 0 (at loan signing). 5% "points" means 5% of the principal amount of the loan. What is zero's pre-tax cost of debt capital (r_D) for this loan?

Hints: 1. r_D is the IRR of the loan, with all the loan's cash flows, including the fee. 2. You will need the quadratic equation, Excel, a financial calculator or trial and error to solve for r_D.

Round your answer to four decimal places.

5. Zanco has pre-tax rD of 8.84% on its one outstanding bond. The company has no other debt and its tax rate is 30%. What is the firm's post-tax cost of debt capital?

Round your answer to three decimal places.