1. The Lanoi Company has EBIT of $30,000 and market value debt of $150,000 outstanding with an 8% coupon rate. The cost of equity for an all equity firm would be 12%. Aggie has a 30% corporate tax rate. Investors face a 20% tax rate on debt receipts and a 12% rate on equity. Determine the value of Aggie.

a) $130,500

b) $142,698

c) $248,537

d) $209,500

e) $332,143

2. Jemisen's firm has expected earnings before interest and taxes of $2,000. Its unlevered cost of capital is 14 percent and its tax rate is 34 percent. The firm has debt with both a book and a face value of $3,200. This debt has a 9 percent coupon and pays interest annually. What is the firm's weighted average cost of capital?

a) 12.61 percent

b)13.46 percent

c) 12.78 percent

d) 12.55 percent

e) 13.08 percent