11, 12 and 13

10. The Lincoln Company sold a $1.000 par value, noncallable bond several yeausally. The now has 20 years to maturity and a 7.00% annual coupon that ispad set that bond a. 3.8796 b. 4.3396 c. 5.93% d. 6.15% e. 7.74% 11. Rowan Inc. has 60,000 bonds outstanding, and its bonds are priced at par, with a coupon rate of 5%. The current market price of the company's stocks is $45 per share. It is twice as risky as an average stock in the market. The 3-month US Treasury Bill rate is 3.5% and the S&P 1500 Index return is 11.25%. Rowan Inc. finances 30% of its assets with equity, and the remaining portion with debt. Assuming that the tax rate is 35%, what is the weighted average cost of capital of Rowan Inc.? a. 5.00% b. 6.13% c, 7.98% d. 13.45% e. 19.00% 12. Which of the following is correct? a. The cost of capital used in capital budgeting should reflect the average cost of the sources of long-term funds a firm uses to acquire assets. b. The before-tax cost of debt, which is lower than the after-tax cost, is used as the component cost of debt for purposes of developing the firm's WACC. c. All of the above are correct. 13. Which of the following is correct? a. The component costs of capital are market-determined variables in the sense are based on investors' required returns. b. The cost of debt is equal to one minus the tax rate multiplied by the average on all outstanding debt. c. All of the above are correct