Please answer questions 6 through 10 correctly. Thank you

12/9/2016 5. Assignment Print View Award: 1.00 point The Up and Coming Corporation's common stock has a beta of 1.5. If the risk-free rate is 3.5 percent and the expected return on the market is 14 percent, what is the company's cost of equity capital? (Do not round your intermediate calculations.) rev: 09_20_2012 24.5% 20.02% 19.25% 18.29% 20.21% References 6. Multiple Choice Learning Objective: 14-01 How to determine a rms cost of equity capital. Diculty: Basic Section: 14.2 The Cost of Equity Award: 1.00 point Suppose your company needs $15 million to build a new assembly line. Your target debtequity ratio is .60. The flotation cost for new equity is 8 percent, but the flotation cost for debt is only 5 percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small. a. What is your company's weighted average flotation cost, assuming all equity is raised externally? (Round your answer to 2 decimal places. (e.g., 32.16)) Flotation cost % b. What is the true cost of building the new assembly line after taking flotation costs into account? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount. (e.g., 32)) Amount raised $ References http://ezto.mheducation.com/hm.tpx 4/7 12/9/2016 Assignment Print View Worksheet Learning Objective: 1404 How to correctly include flotation costs in capital budgeting projects. Difficulty: Basic Section: 14.6 Company Valuation with the WACC 7. Award: 1.00 point Trower Corp. has a debtequity ratio of 0.90. The company is considering a new plant that will cost $110 million to build. When the company issues new equity, it incurs a flotation cost of 8 percent. The flotation cost on new debt is 3.5 percent. What is the initial cost of the plant if the company raises all equity externally? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.) Initial cash flow $ What is the initial cost of the plant if the company typically uses 60 percent retained earnings? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.) Initial cash flow $ What is the initial cost of the plant if the company typically uses 100 percent retained earnings? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.) Initial cash flow $ References Worksheet Learning Objective: 1404 How to correctly include flotation costs in capital budgeting projects. Difficulty: Challenge Section: 14.6 Company Valuation with the WACC http://ezto.mheducation.com/hm.tpx 5/7 12/9/2016 8. Assignment Print View Award: 1.00 point Stock in Dragula Industries has a beta of 1.1. The market risk premium is 7 percent, and Tbills are currently yielding 4.5 percent. The company's most recent dividend was $1.70 per share, and dividends are expected to grow at a 6 percent annual rate indefinitely. If the stock sells for $39 per share, what is your best estimate of the company's cost of equity? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Cost of equity % References Worksheet Learning Objective: 1401 How to determine a firms cost of equity capital. Difficulty: Basic Section: 14.2 The Cost of Equity 9. Award: 1.00 point Fama's Llamas has a weighted average cost of capital of 9.6 percent. The company's cost of equity is 12 percent, and its pretax cost of debt is 7.9 percent. The tax rate is 35 percent. What is the company's target debtequity ratio? (Do not round intermediate calculations and round your final answer to 4 decimal places. (e.g., 32.1616)) Debtequity ratio Hints Hint #1 References http://ezto.mheducation.com/hm.tpx 6/7 12/9/2016 Assignment Print View Worksheet Learning Objective: 1403 How to determine a firms overall cost of capital and how to use it to value a company. Difficulty: Basic Section: 14.4 The Weighted Average Cost of Capital 10. Award: 1.00 point The Zombie Corporation's common stock has a beta of 1.2. If the riskfree rate is 4.8 percent and the expected return on the market is 11 percent, what is the company's cost of equity capital? (Round your answer to 2 decimal places. (e.g., 32.16)) Cost of equity capital % Hints Hint #1 References Worksheet Learning Objective: 1401 How to determine a firms cost of equity capital. Difficulty: Basic Section: 14.2 The Cost of Equity http://ezto.mheducation.com/hm.tpx 7/7