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1. The Hoosic Company has $285 million of debt outstanding at the same time its common stock is worth $665 million. Analysis indicates that the

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1. The Hoosic Company has $285 million of debt outstanding at the same time its common stock is worth $665 million. Analysis indicates that the firm's equity has a beta of 1.25. Ignore taxes. What is the firm's asset beta? A. 0.536 B. 1.786 C. 0.875 2. Now suppose that Hoosic pays corporate taxes at a 35% rate. Assume that the before tax cost of debt is still 6%, and that the cost of equity is now 14.95%. What is Hoosic's weighted average cost of capital (WACC)? A. 12.27% B. 13.00% C. 11.64%

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