Describe and interpret the assumptions related to the problem.

Apply the appropriate mathematical model to solve the problem.

Calculate the correct solution to the problem. Submit all answers as percentages and round to two decimal places.

1.CosaNostra Pizza is undergoing a major expansion. The expansion will be financed by issuing new 30-year, $1,000 par, 9% semiannual coupon bonds. The market price of the bonds is $880 each. Flotation expense on the new bonds will be $90 per bond. The marginal tax rate is 35%. What is the post-tax cost of debt for the newly-issued bonds?

2.Fedland Inc. will issue new common stock to finance an expansion. The existing common stock just paid a $3.50 dividend, with dividends expected to grow at a constant rate of 5% indefinitely. The stock sells for $40.00 and flotation expenses of 4% of the selling price will be incurred on new shares. What is the cost of new common stock?

3.YT Inc. will issue new common stock to finance an expansion. The existing common stock just paid a $1.25 dividend. Dividends are expected to grow at a constant rate of 8% indefinitely. The stock sells for $54 and flotation expenses of 10% of the selling price will be incurred on new shares. What is the cost of internal equity?

4.Hiro Corp. common stock is selling for $32 per share. The last dividend was $3.60 and dividends are expected to grow at an 8% annual rate. Flotation costs on new stock sales are 12% of the selling price. What is the cost of Hiro Inc.'s new commonstock?

5.Enzo, Inc. has a target capital structure of 60% debt and 40% common equity and is in the 40% marginal tax rate. If Enzo's before-tax cost of debt is 8% and cost of common stock is 18%, what is the firm's WACC?

6.Raven Co. expects to pay a dividend of $5.25 per share in one year. The current price of their common stock is $65.50 per share. What is the cost of internal common equity if the long-term growth in dividends is projected to be 5.2 percent indefinitely?

7.L. Bob Rife Company's preferred stock is currently selling for $160.00 and pays a perpetual annual dividend of $8.00 per share. New issues of preferred stock would incur $12 per share in flotation costs. Compute the cost of new preferredstock.

8.Reason Corp. just issued a series of 20-year maturity bonds with a par value of $1,000 and a 4% coupon, paid semiannually. The bonds can sell in the open market for $1,125. Flotation costs on the new bonds are $80. If Reason, Corp. is in the 35% tax bracket, what is the pre-tax cost of debt on the newly issued bonds?

9.Lee Airlines plans to issue 12-year bonds with a par value of $1,000 that will pay $70 every six months. The bonds have a market price of $960. Flotation costs on new debt will be 7%. If the firm is in the 35% marginal tax bracket, what is the posttax cost of new debt?

10.Fisheye Inc. is investing in a new project costing $24 million. It will raise $6 million in bonds, $4 million in preferred stock, and $14 million in retained earnings. If the after-tax cost of debt is 5%, the cost of preferred stock is 10%, the cost of retained earnings is 18%, and the cost of new common stock is 24%, what is the WACC?