Assume Ford Motor Company is discussing new ways to recapitalize the firm and aie additional capital. Its current capital structure has a 25% weight in equity, is n pleidma and 65% in debt. The cost of equity capital is 13% the cost of preferred stock ?Y,and ofdebt is 8%. What is the weighted average cost of apital for Ford lts tws 40%? A)836% B) 800% C)727% D)699% 33) AssumeJUP has debt with book value of $20 nlion, trading at 120% of ")- The bonds have a yield to maturity of7%The firm's book value of equityisS16 milimrOhe2nlin shares trading at $19 per share. The firm's cost of equity is 12% What is jth wor tm marginal tax rate is 35%? A) 9.57% B)729% c) 10.03% D) 912% 34) Assume preferred stock of Foed Motors pays a dividend of $3,00 each year and trades at o price 34) of $20. What is the cost of preferred stock capital for Ford? ?) 120% B) 150% C) 165% D)135% 35) IBM expects to pay a dividend of $2 next year and expect..e dividends to pow .t 9%,year 35) The price of ISM is $80 per share. What is IBMr's cost of equity - A) 10.35% B) 11.50% C) 10.93% D)920% ) Your estimate of the market risk premium is 7% The risk-free rate of min i 4% and Motors has a beta of 1.6. What is General Motors' cost of equity capital? c) 160% A) 152% B) 137% D) 144% Your estimate of the market risk premium is 7%. The risk-free rate of tetum is 4%, and Motors has a beta of 1.4. According to the Capital Asset Pricing Model (CAPMA) what is xpected return? A) 10.4% Genral B) 13.1% C)113% D)138% ppose you have $10,000 in cash and you decide to borrow another siAO0 ata(n) e%mm, H) 38)_ to invest in the stock market. You invest the entire $20,000 in an exchange-traded fund (TF h a 11% expected return and a 20% volatility. The expected retum on your of your here osest to :8% B) 9.1% C)7% D)4% ification reduces the risk of a portfolio because-?--and some of the risks are ed out of the portfolio. ocks are not affected by the market cks have common risks 39) B) stocks are fully predictable D) stocks do not move identically ou invest in 220 shares of Johnson and Johnson (INI) at $70 per share and 240 shares of 40) OO) at $20 per share. If the price of Johnson and Johnson increases to $80 and the price creases to $18 per share, what is the return on your portfolio