A) Cost of Equity: CAPM

Booher Book Stores has a beta of 0.8. The yield on a 3-month T-bill is 3% and the yield on a 10-year T-bond is 7.5%. The market risk premium is 4%, and the return on an average stock in the market last year was 11.5%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places.

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B) WACC

Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 40%, rd = 7%, rps = 8.5%, and rs = 11%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places.

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C) WACC

David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 11%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 8.95%. What is the company's cost of equity capital? Round your answer to two decimal places.

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D) NPV

A project has an initial cost of $47,325, expected net cash inflows of $11,000 per year for 8 years, and a cost of capital of 8%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent.

$ ______