1. ABC Inc. is expected to grow at a 4 percent rate for as long as it is in business. Currently the companys common stock is selling for $34 per share. The most recent dividend paid by ABC was $4.25 per share. What is the companys cost of common equity?

2. A company is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity, current value of $900, and par value of $1,000. The bond makes semiannual payments and has a coupon rate of 5 percent. If the tax rate is 20 percent, what is the after-tax cost of debt?

3. XYZ Inc. has determined that the yield to maturity (YTM) on new bonds is 5 percent, and its cost of common stock is 11 percent. If its capital structure consists of 40 percent debt and 60 percent common equity, what is its weighted average cost of capital (WACC)? The tax rate is 35 percent.

4. A firm has a capital structure of 40 percent common stock, 50 percent debt, and 10 percent preferred stock. Its cost of equity is 10 percent, the (before-tax) cost of debt is 6 percent, and the cost of preferred stock is 12 percent. The relevant tax rate is 20 percent. What is this firms WACC?