1.Abler Corporation has corporate bonds trading in the market at $820.These bonds have $1000 face (or maturity) value and pay an 8% stated (or coupon) rate annually ($40 every six months).These bonds have 12 years to maturity.What is the pretax cost of Abler Corporation's debt?

2.Bob Corporation has a pretax cost of debt of 12% and is in the 35% marginal tax bracket.What is Bob's after-tax cost of debt?

3.Ted Corporation wants to estimate its cost of common equity using the Capital Asset Pricing Model.Assume the risk-free rate is 2.5%, the market risk premium is 6% and Ted Corporation has a Beta of .8.Using the capital asset pricing model, what is Ted's estimated cost of common equity?

4.Mary Corporation has $750,000 is outstanding debt with a market value of $750,000.Mary has common equity on the books at a value of $1,000,000 but it is selling in the market at $1,700,000.What are the book weightings for Mary Corporation?

5.Continuing from the prior problem, what are the market weightings for Mary Corporation?

6.Jerry Corporation has 400,000 bonds outstanding that are trading at $950.In addition, Jerry has 6,000,000 million shares of common stock outstanding at $82.What are the market weightings for Jerry Corporation?

7.Sally Corporation is financed with 40% debt and 60% common equity.They estimate that their after-tax cost of debt is 6% and their cost of common equity is 9%.What is Sally's weighted average cost of capital?

8.Alice Corporations has two divisions.The one in the high-risk industry has a beta of 1.5 and can be financed optimally in line with others in the industry at 25% debt and 75% equity.The low risk division has a beta of .8 and based on industry averages, can be financed optimally at 50% debt and 50% equity.Assuming the risk-free rate of return on 10-year government securities is 2.7% and the market risk premium is 5%.What is the estimated cost of common equity for the high-risk division?

9.Continuing from the prior problem, what is the estimated after-tax cost of equity for the low-risk division?

10.Still working with Alice Corporation and the information from the prior two problems, assume that the after-tax cost of debt for the high-risk division is 6% and the after-tax costs of debt for the low-risk division is 5%.What are the weighted average divisional costs of capital for each division?