Bermuda Cruises issues only common stock and coupon bonds. The firm has a debtequity ratio of 1.37. The cost of equity is 13.3 percent and the pretax cost of debt is 7.5 percent. What is the capital structure weight of the firm's equity if the firm's tax rate is 40 percent?

.3941

.4937

.4672

.4219

.5781

8

81

The Two Dollar Store has a cost of equity of 10.8 percent, the YTM on the company's bonds is 5.4 percent, and the tax rate is 35 percent. If the company's debtequity ratio is .43, what is the weighted average cost of capital?

8.12%

7.44%

9.18%

5.70%

8.61%

9

91

Kountry Kitchenhas a cost of equity of 10.8 percent, a pretax cost of debt of 6.3 percent, and the tax rate is 35 percent. If the company's WACC is9.01 percent, what is its debtequity ratio?

.49

2.75

.36

1.33

.27

10

101

Take It All Away has a cost of equity of 10.54 percent, a pretax cost of debt of 5.27 percent, and a tax rate of 35 percent. The company's capital structure consists of 68 percent debt on a book value basis, but debt is 28 percent of the company's value on a market value basis. What is the company's WACC?

9.06%

8.55%

9.67%

12.09%

7.86%

11

111

Judy's Boutique just paid an annual dividend of $3.01 on its common stock. The firm increases its dividend by 3.70 percent annually. What is the company's cost of equity if the current stock price is $41.08 per share?

10.41%

11.30%

11.03%

11.70%

10.72%

12

121

Upton Umbrellas has a cost of equity of 10.9 percent, the YTM on the company's bonds is 5.6 percent, and the tax rate is 40 percent. The company's bonds sell for 94.1 percent of par. The debt has a book value of $390,000 and total assets have a book value of $946,000. If the market-to-book ratio is 2.56 times, what is the company's WACC?

4.91%

9.35%

7.90%

9.12%

7.71%