1. Your portfolio consists of two stocks: 90 shares of Stock A that sell for $36 per share and 110 shares of Stock B that sell for $20 per share.

Required:
(a)	What is the portfolio weight of Stock A?
	(Click to select)0.58560.60560.59560.54250.6629

(b)

What is the portfolio weight of Stock B?

(Click to select)0.38420.37990.40440.41440.3771

2. The expected return on the market is 13 percent, and Treasury bills are yielding 6.3 percent. The common stock of Trompeta Inc. has a beta of 1.30 and the dividends are expected to grow indefinitely at 4 percent annually. The most recent stock price for the company is $80.

Calculate the cost of equity. 3. Davidson Consulting believes that they can help your company reduce production costs in exchange for a one-time fee. You estimate that, if you hire the consulting firm, the cost savings will be $1.74 million after-taxes at the end of the first year, and these cost savings will grow at a rate of 1.00 percent per year indefinitely. Your company estimates the cost of capital on this project as 10.31 percent. Maximum cost?