Q.1 In 2015, Caterpillar Inc. had about 652 million shares outstanding. Their book value was $31.3 per share, and the market price was $73.50 per share. The company's balance sheet shows that the company had $21.20 billion of long-term debt, which was currently selling near par value.

a.What was Caterpillar's book debt-to-value ratio?(Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.)

b.What was its market debt-to-value ratio?(Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.)

Q.2 Pangbourne Whitchurch has preferred stock outstanding. The stock pays a dividend of $6 per share, and sells for $30. The corporate tax rate is 35%. What is the percentage cost of the preferred stock?(Enter your answer as a whole percent.)

Q.3 Reactive Power Generation has the following capital structure. Its corporate tax rate is 20%.

SecurityMarket Value Required Rate

of Return

Debt$ 20million 4%

Preferred stock 30million 6

Common stock 50million 10

What is its WACC?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)