1.

Stock in Country Road Industries has a beta of 1.44. The market risk premium is 7.5 percent, and T-bills are currently yielding 4 percent. The company's most recent dividend was $1.9 per share, and dividends are expected to grow at a 6.5 percent annual rate indefinitely. If the stock sells for $32 per share, what is your best estimate of the company's cost of equity? (Do not round your intermediate calculations.)

12.82%

13.81%

11.13%

14.8%

9.04%

2.

Holdup Bank has an issue of preferred stock with a $8 stated dividend that just sold for $90 per share. What is the bank's cost of preferred stock?

8.00%

8.89%

9.33%

8.53%

9.24%

5.

Consider the following information for Evenflow Power Co.,

Debt:		4,500 7.5 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 105 percent of par; the bonds make semiannual payments.
Common stock:		90,000 shares outstanding, selling for $65 per share; the beta is 1.16.
Preferred stock:		13,500 shares of 7 percent preferred stock outstanding, currently selling for $108 per share.
Market:		9 percent market risk premium and 7 percent risk-free rate.

Assume the company's tax rate is 33 percent.

Required:

Find the WACC. (Do not round your intermediate calculations.)

11.11%

11.51%

11.01%

11.33%

12.02%