1. The following financial statement data pertains to Northridge, Inc., a manufacturer of women's outerware (dollar amounts in millions):

Total Assets	$145,782
Interest-Bearing Debt	$32,659
Average Pre-tax borrowing cost	8.25%
Common Equity:
Book Value	$22,515
Market Value	$65,843
Income Tax Rate	40%
Market Equity Beta	0.85
Market Premium	7.5%
Risk-free interest rate	2.2%

Required:

a.

Calculate the company's cost of equity capital.

b.

Calculate the weight on debt capital that should be used to determine Northridges weighted-average cost of capital.

c.

Calculate the weight on equity capital that should be used to determine Northridges weighted-average cost of capital.

d.

Calculate Northridges weighted-average cost of capital.

2. The following data pertain to Loren Corporation (dollar amounts in thousands):

Total Assets	$10,254
Interest-Bearing Debt	$1,257
Average Pre-tax borrowing cost	9.20%
Common Equity:
Book Value	$5,624
Market Value	$21,479
Income Tax Rate	32%
Market Equity Beta	1.56
Riskless interest rate	3.8%
Market risk premium	6.5%

Using this information, calculate the following:

a.	Loren Corporations cost of equity capital
b.	The weight on debt capital that should be used to calculate Lorens weighted-average cost of capital.

3. For each of the following companies, determine the total dividends paid to common equity holders in order to value the firm:

		Company
(amounts in thousands)	Adam	Baxter	Cooper
Dividends Paid to Common Shareholders	$124	$2,134	$325
Common Stock Repurchases	$412	$140	$1,247
Common Stock Issued	$95	$1,985	$145