1. Patton Paints Corporation has a target capital structure of 60% debt and 40% common equity, with no preferred stock. Its before-tax cost of debt is 12%, and its marginal tax rate is 40%. The current stock price is P = $22.50. The last dividend was D0 = $2.00, and it is expected to grow at a 7% constant rate. What is its WACC?

A)

11.68%

B)

10.38%

C)

10.68%

D)

10.92%

E)

11.28%

2. Kennedy Air Services is now in the final year of a project. The equipment originally cost $20 million, of which 80% has been depreciated. Kennedy can sell the used equipment today for $6 million, and its tax rate is 40%. What is the equipments after-tax salvage value?

A)	5.2 million

B)	5.4 million

C)	5.0 million

D)	4.8 million

E)	4.6 million