1. Marcia Stubern is planning for her golden years. She will retire in 20 years, at which time she plans to begin withdrawing $60,000 annually. She is expected to live for 20 years following her retirement. Her financial advisor thinks she can earn 9% annually. How much does she need to invest at the end of each year before she retires, to prepare for her financial needs after her retirement?

3. Zinger Corporation manufactures industrial type sewing machines and received a very large order from a few European countries. In order to be able to supply these countries with its products, Zinger will have to expand its facilities. Of the required expansion, Zinger feels it can raise $75 million internally through retained earnings. The firm's optimum capital structure has been 35% debt, 10% preferred stock, and 55% equity. The company will try to maintain this capital structure in financing this expansion plan. Currently, Zinger's common stock is traded at a price of $28 per share. Last year's dividend was $1.50 per share. The growth rate is 8%. The company's preferred stock is selling at $45 and has been yielding 6% in the current market. Flotation costs have been estimated at 8% of common stock and 3% of preferred stock. Zinger Corp. has bonds outstanding at 6%, but its investment banker has informed the company that interest rates for bonds of equal risk are currently yielding 5%. Zinger's tax rate is 40%. a) Compute the cost of Kd, Kp, Ke, Kn. b) Calculate the initial weighted average cost of capital using Ke.

4. Dixon Corporation is considering a public offering of common stock. The firm will offer one million shares of common stock for sale. The estimated selling price is $45 per share, with Dixon Corp. receiving $40.50 per share after the offering. Additional registration fees are estimated at $275,000. a) What is the spread in dollars? In percent? b) What are the total expenses of the issue? c) If Dixon Corp. needs to generate $28 million, how many shares will have to be sold?