1) Western Electric has 21,000 shares of common stock outstanding at a price per share of $61 and a rate of return of 15.6 percent. The firm has 11,000 shares of $8 preferred stock outstanding at a price of $48 a share. There are 700 bonds and currently sells for 96.5 percent of face. The yield to maturity on the debt is 8.81 percent. What is the firm's weighted average cost of capital if the tax rate is 35 percent?

a) 20.39 percent b) 14.19 percent c) 14.52 percent d) 13.14 percent e) 13.92 percent

2) ABC Tiles has 50,000 shares of common stock outstanding at a price of $37 a share. It also has 1000 shares of preferred stock outstanding at a price of $20 a share. There are 800 bonds outstanding that have a semiannual coupon payment of $25. The bonds mature in four years, have a face value of $1,000, and sell at 97 percent of par. What is the capital structure weight of the common stock?

a) 69.92 percent b) 60.08 percent c) 69.28 percent d) 68.15 percent e) 62.91 percent