Answer all of these questions with the right question number next to the correct choice. ANSWER ALL OR NONE

2-A firm has total equity of $1,200 and total debt of $300. The firm is operating at its optimal capital structure. What percent of a planned expansion of $500 should be financed from equity?

A)33.33%

B)400%

C)80%

D)75%

3-La Pasiega, Inc. has the following summary liabilities with a tax rate of 21%:

Liabilites		k
Debt	700	11.5%
RE	1500	13.6%
CS	2000	17.8%

4-Which of the following can a firm control in order to affect its cost of capital?

A)The risk associated with new projects

B)The capital structure of the average firm in the industry where this firm operates.

C)Economic expansion and recession

D)Tax rate fluctuations

5-The cost of capital:

A)Is the proper discount rate to apply to the cash flows generated by a firm's projects during their valuation

B)Is given by the weighted average cost of capital (WACC) when the firm is operating at its optimal capital structure

C)Should reflect the average cost of the various sources of long-term funds a firm uses to support its assets

D)All the other statements are correct