Problem 1 All of the following are examples of debt capital, except: (choose one) (a) Mortgage on equipment (c) Short-term loan from a bank (b) Long-term bonds (d) Preferred stock Problem 2 For a 60-40 D-E mix of investment capital the maximum cost for debt capital that would yield a WACC of 10% when the cost of equity capital is 4% is closest to: (choose one) (a) 8% (c) 14% (b) 12% (d) 16% Problem 3 If a company finances an expansion in its production facilities by issuing $6 million in preferred stock, using $3.5 million in retained earnings, and obtaining S15 million via a secured loan, it will have a D-E mix closest to: (choose one) (a) 60-40 (c) 40-60 (b) 50 -50 (d) 30-70 Problem 4 All of the following are factors that affect the effective MARR of a project, except: (choose one) (a) Project risk (c) Availability of capital (b) Product selling price (d) Attractiveness of other investment opportunities Problem 5 Gonzales, Inc. financed a new product as follows: $5 million in stock sales at 13.7% per year, $2 million in retained earnings at 8.9% per year, and $3 million through convertible bonds at 7.8% per year. The company's WACC is closest to: (choose one) (a) 9% per year (c) 11% per year (b) 10% per year (d) 12% per year