QUESTION 1

"1) Suppose Corporation A has a book (face) debt value of $10 Million USD, trading at 78% of its face value. It also has book equity of $15 Million USD, and 3 Million shares of common stock trading at $9 per share. What weights should Corporation A use for Debt capital when calculating its WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"

10 points

QUESTION 2

"2) Suppose Corporation A has a book (face) debt value of $10 Million USD, trading at 78% of its face value. It also has book equity of $15 Million USD, and 3 Million shares of common stock trading at $9 per share. What weights should Corporation A use for Equity capital when calculating its WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"

10 points

QUESTION 3

"3) Last year Firm D had a weighted interest rate of debt of 7.8%. If the corporate tax was 40% for that firm. What was the after tax interest rate on debt for firm D? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"

10 points

QUESTION 4

"4) JJ firm issues a constant amount of preferred dividends at an annual value of $9. Its current preferred stock price is $32. What is the cost of preferred equity for JJ Firm? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"