7. Portfolio Beta Your portfolio is comprised of 36 percent of Stock X, 18 percent of Stock Y, and 46 percent of Stock Z. Stock X has a beta of 1.19, Stock Y has a beta of.87, and Stock Z has a beta of 1.26. What is the beta of your portfolio? 8. CAPM Thayer Farms stock has a beta of 1.38. The risk-free rate of return is 3.87 percent, the inflation rate is 3.93 percent, and the market risk premium is 9.03 percent. What is the expected rate of return on this stock? 9. CAPM The common stock of Jensen Shipping has an expected return of 15.4 percent. The return on the market is 11.2 percent, the inflation rate is 3.1 percent, and the risk-free rate of return is 3.6 percent. What is the beta of this stock? 10. Cost of Capital A corporation has 10,000 bonds outstanding with a 6% annual coupon rate, 8 years to maturity, a $1,000 face value, and a $1,100 market price. The company's 100,000 shares of preferred stock pay a $3 annual dividend, and sell for $30 per share. 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 return is 12%. Assuming a 21% tax rate, what is the company's WACC? 11. Company Valuation with the WACC Pearl Corp. is expected to have an EBIT of $3,000,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $135,000, and $175,000, respectively. All are expected to grow at 20 percent per year for four years. The company currently has $15,500,000 in debt and 1,350,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.5 percent indefinitely. The company's WACC is 8.6 percent and the tax rate is 22 percent. What is the price per share of the company's stock? 12. Flotation Costs You are evaluating a project that requires $324,000 in external financing. The flotation cost of equity is 8.4 percent and the flotation cost of debt is 5.1 percent. What is the initial cost of the project including the flotation costs if you maintain a debt-equity ratio of .35? 13. Dutch Auction LC Delivery has decided to sell 1,800 shares of stock through a Dutch auction. The bids received are as follows: 600 shares at $37 a share, 800 shares at $36, 900 shares at $35, 200 shares at $34, and 100 shares at $32 a share. How much will the company receive in total from selling the 1,800 shares? Ignore all transaction and flotation costs