1. Stock Pricing). On August 7th, 2018, Elon Musk claimed on Twitter that he had secured funding to take Tesla private. On that day, Tesla stock price jumped up from $342 to $380 per share. Why did the financial market react positively to that news? What happened to the short sellers of Tesla stocks during that time? Recall that Musk is the founder of Tesla and was involved with the corporation's day-to-day operations. 2. Capital Structurel. Corporations in the airline industry tend to have higher debt-to-equity ratios than corporations in the tech industry. Explain why. 3. (Cost of Capitall. The expected dividend is $1 for a share of stock priced at $25. What is the cost of common equity i the long-term growth in dividends is projected to be 1% assuming the firm raises additional capital via additional common stock issuance? In this case, for every dollar outside investors pay for a new share of common stocks, the financial market charges the firm a service fee of 5 cents per share. 4. [Dividend Policyl. In June 2014, Apple went through a 7-for-1 stock split. Immediately after the stock split, Apple's stock price fell from $645 per share to $94 per share. Did Apple directly pay its sharcholders any cash in that event? By what percentage does the market value of Apple's common stock increase? Why is stock split an effective way for Apple to reward common stock likeholders? flow data. 5. Capital Budgeting. Spence Company is considering a project that has the following a What is the NPV of the project assuming the company is using WACC of 8%. Year 0: -$1000 Year 1: $350 Year 2: $350 Year 3: $350 Year 4: $350 . Yer 5: $350 You 6: 8300