QUESTION 36

1. Given the following information, calculate the point in total funding where the firm will exhaust available retained earnings. bond yield: 7% tax rate: .38 available retained earnings: $4,500,000 cost of new common stock: 13.9% cost of retained earnings: 11.4% capital structure: 48% debt 7% preferred equity 45% common equity

   		$9,450,000
   		$8,983,000
   		$5,908,000
   		$10,000,000
   		none of these

5 points

QUESTION 37

1. A company negotiates a 5% loan with a limit of $1,300,000 with their bank. The firm uses 34% debt, 12% preferred equity, and 52% common equity in their capital structure. At what level of total funding will the firm exhaust the available funds from the loan?

   		$3.824 million
   		$3.635 million
   		$3.529 million
   		$3.332 million
   		none of these