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Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $30 per share and pays a dividend of $3 a share. The common stock sells for $15 per share and has a beta of .9. There are 2 million common shares outstanding. The market risk premium is 3%.. the risk free rate is 5%. and the rm's tax rate is 40%. BOOK-VALUE BALANCE SHEET [Figures in I millions} Assets Liabilities and Net Worth Bonds. coupon = 0%, paid annually {maturity = Cash and short-term securities 3 2.0 '10 years. current yield to maturity = 3%} $ 5.0 Accounts receivable 3.0 Preferred stock {par value 515 per share} 3.0 Inventories T.0 Common stock [par value 3.20] .4 Plant and equipment 21.0 Additional paidin stockholders\" equity 13.0 Retained earnings 11.0 Total $33.0 Total $33.0 a. What is the market debttovalue ratio of the rm? [Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Market debt ratio |:|tt b. What is University's WAGE? {Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) wwcc :' The total market value of Okefenokee Real Estate Company's equity is $12 million, and the total value of its debt is $3 million. The treasurer estimates that the beta of the stock currently is 1.3 and that the expected risk premium on the market is 10%. The Treasury bill rate is 3%. and investors believe that Oketenckee's debt is essentiaty free of default risk. a. What is the required rate of return on Okefenokee stock? [Do not round intermediate calculations. Enter your answer as a whole percent.) Remiredratecfretum |:|s b. Estimate the WAGS assuming a tax rate of 20%. [Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) WM Es c. Estimate the discount rate for an expansion of the company's present business. {Do not round intermediate calculations. Enter your answer as a percent rounded be 2 decimal places.) mam-11mm |:|s d. Suppose the company wants to diversity into the manufacture of rose-colored glasses. The beta of optical manufacturers with no debt outstanding is 1.5. What is the required rate of return on Okefenokee's new venture? {'I'ou should assume that the risky project will not enable the rm to issue any additional debt} (Do not round intermediate calculations. Enter your answer as a whole percent.) Remiredra'tecfretum |:|s