A company has an operating income of $40,000,000, a tax rate of 34%. The company has a zero-growth rate and pays out all of its income as dividends. Its current stock price is $50, and it has 2,750,0000 common shares outstanding. The company's management is considering to change its capital structure to 30% debt and 70% common equity. It also estimates its WACC as 12%.

14) Assuming that the management of the company follows the new capital structure, what will the new stock's price be? *

6 points

$80.00

$35.00

$82.50

$75.29

MZR Corporation follows a residual distribution model and pays all distributions as dividends. Given the following data:

15) What will be the companys payout ratio? *

7 points

76.75%

74.00%

80.38%

84.76%

16) What is MZRs WACC? *

7 points

8.300%

7.777%

7.125%

9.512%