Question 1

Johnny Cake Ltd. has 10 million shares of stock outstanding selling at $22 per share and an issue of $50 million in 8 percent annual coupon bonds with a maturity of 18 years, selling at 90.5 percent of par. Assume Johnny Cakes weighted-average tax rate is 34 percent, its next dividend is expected to be $3 per share, and all future dividends are expected to grow at 4 percent per year, indefinitely.

What is its WACC? (

Question 2

BetterPie Industries has 7 million shares of common stock outstanding, 4 million shares of preferred stock outstanding, and 20,000 bonds. Assume the common shares are selling for $49 per share, the preferred shares are selling for $26.50 per share, and the bonds are selling for 99 percent of par.

What would be the weights used in the calculation of BetterPies WACC? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Equity weight	%
Preferred stock weight	%
Debt weight	%