1. Company flyhigh has 3 million shares of common stock outstanding at a book value of $2.5 per share. The stock trades for $3.50 per share. It also has $2 million in face value debt that trades at 110% of par. What is its D/E ratio for WACC purposes?

1. 20.95%
2. 25.35%
3. 17.32%
4. 21.50%

2. Company ABC has 50,000 bonds outstanding that are selling at 120% of face value of $1,00. Bonds with similar characteristics are yielding 2.5%. The company also has 3 million shares of common stock outstanding. The stock has a beta of 1.4 and sells for $40 a share. The US treasury bill yielding 2% and the market risk premium is 8%. Jacks tax rate is 35%. What is Jacks weighted average cost of capital?

1. 8.16%
2. 9.34
3. 10.38%
4. 9.63

3. You are considering a new project the initial investment is $7,000. The required rate of return is 5%. The life of the project is 10 yrs. Straight-line depreciation, fixed costs of $6,000, and total sales of $12,000. The variable cost per unit is $4.20. The tax rate is 30%. What is the finance break-even level of production?

1. 1,260 units
2. 1,190 units
3. 1,180 units
4. 1,210 units