1.How could a project manager adjust the cost of capital (i.e., appropriate discount rate) to increase the likelihood of having his/her project accepted? Is this ethical or financially sound?

2.The company’s 100,000 shares of preferred stock pay a $3 annual dividend, and sell for $30 per share. Identify the cost of preferred shares?

3.The company’s 500,000 shares of common stock sell for $25 per share and have a beta of 1.5. The risk free rate is 4%, and the market risk premium is 8%.

Identify the cost of equity.

4. Assuming a 40% tax rate, what is the company’s WACC?