1)AMC Company is considering a new investment project. The investment cost is expected to be $31 million and will return $12.2 million for 5 years in net cash flows. The ratio of debt to equity (D/E) is 3 to 1. The cost of equity is 12.7%, the pretax cost of debt is 6.4%, and the tax rate is 25%. The appropriate discount rate, assuming average risk, is:

		7.23%
		6.78%
		6.49%
		7.65%
		6.03%

2) Given the following information for Duston Company, find its WACC. Assume the company s tax rate is 25 percent. Debt: 30,000, 5.5 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 98 percent of par; the bonds make semiannual coupon payments. Common stock: 400,000 shares outstanding, selling for $47 per share; the beta is 1.65. Market: 7.0 percent market risk premium and 3.2 percent risk-free rate.

		7.97%
		8.35%
		8.72%
		9.00%
		9.35%

3)

Fletcher Construction has a cost of debt of 6.8%, a cost of equity of 12.5%, and a cost of preferred stock of 8.7%. The firm has 400,000 shares of common stock outstanding at a market price of $42.5 a share. There are 50,000 shares of preferred stock outstanding at a market price of $41 a share. The bond issue has a total face value of $2,500,000 and sells at 98% of face value. The tax rate is 25%. What is the weighted average cost of capital for the company?

		12.71%
		12.27%
		11.93%
		11.54%
		11.29%

4)SoundTech Company wants to have a weighted average cost of capital of 7.4%. The firm has an after-tax cost of debt of 5.6% and a cost of equity of 12.4%. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?

		2.50
		2.34
		2.10
		2.78
		1.92

5) Biscoff, Inc. has 450,000 shares of common stock outstanding at a market price of $28.6 a share. Last month, Biscoff paid an annual dividend in the amount of $1.72 per share. The dividend growth rate is 5%. Biscoff also has 30,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 5.5% coupon, pay interest annually, and mature in 10 years. The bonds are selling at 99% of face value. The company's tax rate is 25%. What is Biscoff's weighted average cost of capital?

		6.37%
		7.15%
		5.96%
		7.49%
		6.82%