1) Tapley Inc. recently hired you as a consultant to estimate the company's WACC You have obtained the following information (1) Tapley's bonds mature in 25 years , have a % annual coupon , a par value of $ 1,000 , and a market price of 936.49 (2 The company's tax rate is 40 % (3) The risk free rate is the market risk premium is 5.0 % and the stock's beta is 1.5. (4) The target capital structure consists of 30% debt and 70 % Tapley uses the CAPM to estimate the cost of , and it does not expect to have to issue any new common stock What is its WACC?

a) 10.01% b) 10.64% c) 10.35% d) 9.89% e) 10.91%

2) Edison Electric Systems is considering a project that has the following cash flow and WACC data What is the project's MIRR ? Note that a project's projected MIRR can be less than the WACC and even negative , in which case it will be rejected

WACC=10%

Year : 0 1 2 3

cash flows : $1-.000 $ 350 $370 $390

a) 6.23% b) 5.72% c) 6.87% d) 5.18