1. Dogwood Co. issues only common stock and coupon bonds. The firm has a debt-equity ratio of 1/3. The cost of equity is 15.7 percent and the pre-tax cost of debt is 9.4 percent. The tax rate is 20 percent. What is its weighted average cost of capital (WACC)?

   		13.66 percent
   		14.26 percent
   		12.90 percent
   		11.41 percent

2. You would like to invest $20,000 and have a portfolio expected return of 14 percent. You are considering two securities, M and N. M has an expected return of 20 percent and N has an expected return of 10 percent. How much should you invest in stock M if you invest the balance in stock N to achieve the 14 percent portfolio return?

   		$5,500
   		$8,000
   		$6,250
   		$7,000