1. Given the following information, calculate the weighted average cost of capital for Cannabis Lector a pharmaceutical company. 6% Percent of Capital Structure Debt 55% Preferred Stock 5% Common Stock 40% Additional Information Bond Coupon rate Years to Maturity 15 Bond Price $ 950.00 Corporate tax rate 30% D, common 1.25 Growth rate 3.50% Price common stock $ 40.00 Perferred divdend $ 1.40 Dividend Price $ 25.00 Preferred floation costs $1 Find the Weighted Average Cost of Capital for Cannibus Lector. 2. Find Kj for a stock with a beta of 1.25 if the risk free rate is 4% and the market return is expected to be 14%. a 3. Cannabis Lecture would like to branch into the edibles market and has decided to sell some of its cultivation equipment. The equipment falls into a CCA class with a 20% CCA rate. They purchased the equipment three years ago at a cost of $10 million. Their cost of capital was 15% and their tax rate is 30%: Unless otherwise specified you may assume that assets and UCC in in the clare the end of the colo 4% and the market return is expected Cannabis Lecture would like to branch into the edibles market and has decided to sell some of its cultivation equipment. The equipment falls into a CCA class with a 20% CCA rate. They purchased the equipment three years ago at a cost of $10 million. Their cost of capital was 15% and their tax rate is 30%: Unless otherwise specified you may assume that assets and UCC remain in the class at the end of the sale. If the equipment was sold for $2,000,000 and the UCC balance at the start of the year was 8 million what would be the tax consequences of the sale? i. If this was all the equipment in the class what would be the consequence of the sale? a. b. If the UCC balance at the start of the year was $1 million, the original cost was 2,000,000 and the equipment was sold for $2,500,000 what would be the tax consequence of the sale. c. If they were able to sell the equipment to Canopy Growth 11 million what would be the consequences - assume there is a balance of 17 million in UCC. 4. You are going to start a business renting RV's out of Duncan.. You will need to purchase RV's at a cost of $1,500,000. You plan to keep them for 3 years and then sell them for an average of 60% of their cost. The RV's are expected to generate $750,000 per year in revenue. Annual costs are expected to be $350,000 per year there will be a $50,000 temporary increase in working capital. The company has a 30% tax bracket and their cost of capital is 15%. Should they purchase the RV's? The RV's are in a 20% CCA class