Question 1

1.Mirchi Inc has a weighted Average cost of Capital (WACC) of 11.2% and tax rate of 30%. What is the cost of equity if the after Tax Cost of Debt is 8.8% and the debt to equity ratio is .8?

2.Tark Corp is in the petroleum business. They are planning on paying the following dividends over the next few years; $2, $4, $6, $8. After that the dividend will we $3 per share fore the foreseeable future. The required return is 10%, what is the stock price.

3.You work and Indy Corp and your manager has asked you to perform an analysis. The company is looking to purchase manufacturing equipment that will cost $425,000 to purchase and will have no salvage value at the end of its 5 year life. Net working capital requirement will be $10,000, with annual operating cashflows being $39,000. If the required rate of return is 9% what is this projects equivalent annual costs?

4.HeyYou Inc has a beta is 3.30, with government t-bills yield 1.25%. Analysts are forecasting a market risk premium of 8%. What would be the company's cost of quity?