1. You are analyzing a firm that currently has a weighted average cost of capital equal to 13%. You believe that the firm's after-tax cost of debt will increase by 3% next year. If the firm finances itself with 60% debt and 40% equity, then what will be the firm's new weighted average cost of capital if you are correct? a. 1.20% c. 14.20% b. 13.00% d. 14.80% 2. Suppose XYZ Corporation earns profits of $2 per share, is priced at $20 per share, and pays an annual dividend of $1.50 per share. Which of the following is correct? A. the PE ratio of XYZ stock is 15 B. the dividend yield of XYZ Corporation is 5 percent C. the company pays out 75 percent of its profits in dividends D. all of the above are correct 3. Borrow Little Co. had earnings before interest and taxes of $10,000,000. If Borrow Little can borrow funds at a cost of 8% and the tax rate is 25%, then what is the maximum amount of borrowing it could have had last year if it must maintain a minimum net income after tax of $7,000,000? a. $8,333,333 c. $800,000 b. $6,666,666 d. there is not enough information to solve the problem 4. The cost of issuing new common stock is generally higher than the cost of issuing new preferred stock because of a. tax effects. b. investors required returns c. flotation costs. d. coupon payments