13 - Now that you have calculated the costs of debt, preferred stock and common stock and found out the weights of the capital structure, please determine the Weighted Average Cost of Capital (WACC) for the company. One hint: remember, you already have figured out the after cost of debt.

14 - You are looking at a possible investment. The following chart shows: the State of the World, the Rate of Return and the Probability that each occurs. Please complete the chart to determine the expected rate of return and the standard deviation of this investment.

State of the World Rate of Return Probability Exp. Rate of Return Step 2 Step 3

(A) (B) (C) (D) (E) (F)

Recession -63% .08

Below Avg. -11% .16

Average 14% .51

Above Avg. 29% .15

Boom 78% .10