Jiffy Wax Corp. can sell common stock for $15 per share and its investors require a 14% return. However, the administrative or flotation costs associated with selling the stock amount to $2.40 per share. What is the cost of capital for Jiffy Wax if the corporation raises money by selling common stock?

Select one:

a. 14.00%

b. 16.67%

c. 30.00%

d. 21.50%

A corporate bond has a coupon rate of 9%, a face value of $1,000, and matures in 15 years. Which of the following statements is most correct?

Select one:

a. An investor who buys the bond for $900 and holds the bond until maturity will have a capital loss.

b. An investor with a required return of 10% will value the bond at more than $1,000.

c. An investor who buys the bond for $900 will have a yield to maturity on the bond greater than 9%.

d. If the bonds market price is $900, then the annual interest payments on the bond will be $81.