10. A firm has a market value equal to its book value. Currently, the firm has excess cash of $800 and other assets of $4,200. Equity is worth $5,000. The firm has 200 shares of stock outstanding and net income of $350 What will the new earnings per share be if the firm uses all its excess cash to complete a stock repurchase? A. $1.51 B. $1.75 C. $1.96 D. $2.00 E $2.08 11. Assume that the cost of equity capital for XYZ is 17.8%. Also assume a weighted average interest rate of 10% and a targeted capital structure composed of 75% equity and 25% debt. Finally, assume a tax rate of 30%. What is XYZ's WACC? A. 7.51% B. 10.51% C. 12.51% D. 15:51% 12. DQZ Telecom is considering a project for the coming year, which will cost $50 million DQZ plans to use the following combination of debt and equity to finance the investment -Issue 15 million of 20 year bonds at a price of $101, with a coupon rate of 8 percent, and floatation costs of 2 percent of par - Use $35 million of funds generated from (retained) earnings The equity market is expected to earn 12 percent U.S. treasury bonds are currently yielding 5 percent. The beta coefficient of DQZ is estimated to be 0.60. DOZ is subject to an effective corporate income tax rate of 40 percent. Assume that after tax cost of debt is 7 percent and the cost of equity is 12 percent. Determine the weighted average cost of capital A. 6.30% B. 9.5% C. 8.5% D. 10.50% 13. A company with a combined corporate tax rate of 30% has the following capital structure: Weight Instrument Cost of capital 40% Bonds 10% 50% Common stock 10% 10% Preferred stock 20% What is the weighted-average after-tax cost of capital for this company?? A. 8.2% B. 7.7% C. 9.8% D. 3.3% 3