Lannister Manufacturing has a target debtequity ratio of .50. Its cost of equity is 14 percent, and its cost of debt is 8 percent. If the tax rate is 38 percent, what is the companys WACC?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

WACC

%

Mullineaux Corporation has a target capital structure of 60 percent common stock, 15 percent preferred stock, and 25 percent debt. Its cost of equity is 10 percent, the cost of preferred stock is 4 percent, and the pretax cost of debt is 6 percent. The relevant tax rate is 35 percent.

a.	What is the companys WACC?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

WACC

%

b.	What is the aftertax cost of debt?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Aftertax cost of debt

The Graber Corporations common stock has a beta of 1.2. If the risk-free rate is 5.2 percent and the expected return on the market is 10 percent, what is the companys cost of equity capital?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

A portfolio is invested 12 percent in Stock G, 52 percent in Stock J, and 36 percent in Stock K. The expected returns on these stocks are 8 percent, 14 percent, and 16 percent, respectively. What is the portfolio's expected return?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

You own a portfolio that is 35 percent invested in Stock X, 20 percent in Stock Y, and 45 percent in Stock Z. The expected returns on these three stocks are 8 percent, 16 percent, and 12 percent, respectively. What is the expected return on the portfolio?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

What are the portfolio weights for a portfolio that has 130 shares of Stock A that sell for $40 per share and 110 shares of Stock B that sell for $30 per share?(Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

	Portfolio weights
Stock A
Stock B

You own a portfolio that has $3,000 invested in Stock A and $4,000 invested in Stock B. If the expected returns on these stocks are 8 percent and 11 percent, respectively, what is the expected return on the portfolio?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

onsider the following information:

State of Economy	Probability of State of Economy	Portfolio Return If State Occurs
Recession		.27			.17
Boom		.73			.20

Calculate the expected return.(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Consider the following information:

		Rate of Return If State Occurs
State of	Probability of
Economy	State of Economy	Stock A	Stock B	Stock C
Boom		.56			.13			.21			.39
Bust		.44			.15			.05			.06

a.	What is the expected return on an equally weighted portfolio of these three stocks?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Expected return

%

b.	What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C?(Do not round intermediate calculations and round your answer to 6 decimal places, e.g., 32.161616.)

he Absolute Zero Co. just issued a dividend of $2.55 per share on its common stock. The company is expected to maintain a constant 5.3 percent growth rate in its dividends indefinitely.

If the stock sells for $51 a share, what is the companys cost of equity?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of equity

Suppose Stark Ltd. just issued a dividend of $1.91 per share on its common stock. The company paid dividends of $1.60, $1.66, $1.73, and $1.84 per share in the last four years.

If the stock currently sells for $45, what is your best estimate of the companys cost of equity capital using the arithmetic average growth rate in dividends?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of equity

%

What if you use the geometric average growth rate?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of equity

Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 20 years to maturity that is quoted at 108 percent of face value. The issue makes semiannual payments and has an embedded cost of 10 percent annually.

What is the companys pretax cost of debt?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Pretax cost of debt

%

If the tax rate is 35 percent, what is the aftertax cost of debt?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Jiminys Cricket Farm issued a bond with 30 years to maturity and a semiannual coupon rate of 6 percent 4 years ago. The bond currently sells for 95 percent of its face value. The companys tax rate is 35 percent.

a.	What is the pretax cost of debt?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Pretax cost of debt

%

b.	What is the aftertax cost of debt?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Aftertax cost of debt

%

c.	Which is more relevant, the pretax or the aftertax cost of debt?