Given the following information, calculate the firm's WACC using retained earnings. Target capital structure: 50% debt, 10% preferred, 40% common equity Preferred stock dividend: $7 Preferred stock price: $125 Before-tax cost of debt: 8% Required return on common stock: 11% Marginal tax rate: 25% 8.04% 9.1296 7.96% 6.95% Question 33 1 pts Which of the following statements is most accurate? If the intrinsic value of a stock is greater than its actual market price, then the stock is considered overvalued, and it should be sold The intrinsic value of a stock is always equal to its actual market price. If a stock's intrinsic value is less than its actual market price, then the stock is undervalued, and it would be a good buy. If a stock's actual market price is above its intrinsic value, then the stock is considered overvalued, and it should be sold. Question 24 1 pts Carson Industries is considering an expansion. The necessary equipment would be purchased for $200,000 and fully depreciated using straight-line depreciation over 4 years. If the equipment can be sold for $20,000 at the end of the fourth year and the tax rate is 25%, what is the net salvage value on this equipment? $5,000 $20,000 $26,000 $15.000 Question 25 1 pts A company owns a facility which can either be leased for $100,000 per year or used for Project M, which would produce a new product for the company. Project Mwould reduce sales within the company's other product lines by about 10%. How should these issues be handled when estimating the new project's cash flows? Project M should not move forward due to the lease and cannibalization. Neither the lease nor the expected cannibalization should impact Project M's cash flows. Only the lease should be considered in the cash flow analysis because the cannibalization cannot be quantified with certainty. The lease and any potential cannibalization should be considered as charges against the project, but if Project M is still shown to be profitable then it should continue. 7) Set your calculators to show at least 4 decimal pl Question 27 1 pts Which of the following statements regarding the impact of inflation on the NPV estimated cash flow streams is true? Building inflation into cash flow forecasts is not advised. Inflation should be accounted for by inflating each individual cash flow. Falling to account for inflation effectively creates an upward bias on NPV. Inflation does not impact NPV of estimated cash flow streams