Question 1 The beta for the equity in Enough Corporation is 0.95. The market risk premium is 7 per cent, and the risk-free rate is 5 per cent. Enough has a target debt/equity ratio of 25 per cent. Its cost of debt is 9 per cent, before taxes. If the tax rate is 30 per cent, what is the WACC?

Question 2 On 11 May 2010, Chase Manhattan had an issue of preference shares that traded for $80 per share. If the face value of the issue was $100 per share, the dividend was $7.60 and the tax rate was 39 per cent in 1990 and it is now 30 per cent. What is Chase Manhattan's cost of preference shares?