11. Honest Abe's is a chain of farniture retail stores. Ietegral Designs is a furniture maker and a supplier carry no debt, ie.. are 100% equity financed. The nsk-free rate of return is 3.5 percent and the tolknest Abe's Hanest Abe's has a beta of 138 as compared to Integral Designs' beta or in Beth firms market risk premium is 8 percent. What discount rate should Honest Abe's use if it considers a project that involves the manufacturing of furniture? A. 12.46% B. 12.92% 13.50% D. 1408% E 14.54% 12 Company X has 2 million shares of common stock outstanding at a book value of $2 per share. The stock trades for $3.00 per share. It also has S2 million in face value or debt that trades at 90% of par. What is the appropriate debt ratio (DND+E) to use for calculating Company X's weighted-average cost of capital? A. 23.1% B. 25.0% C. 31.0% D. 33.3% is. Which of the following factors favor the issuance of equity in the financing decision? I. Market signaling Il. Distress costs III. Management incentives IV. Financial flexibility A I, II, and IV only B. II and IV only C I and III only D. II, III, and IV only E I and II only