Question 48 (0.5 points) Corporation Fun's common stock price just rises to $25 per share with 500,000 shares outstanding. You run a regression and get a beta of 1.5 for the stock. Treasury Bills are yielding 4% and the market return is expected to be 12%. Corporation Fun has 10,000 bonds outstanding ($1,000 face value, $1,100 market price, and YTM of 4.5%). There are also 100.000 shares of preferred stock that pays a $3 annual dividend and sells for $30 per share. Ignoring taxes, what is the Corporation Fun's WACC? 10.35% 10.55% 9.80% Question 47 (0.5 points) Which of the following is/are true regarding risk and return? I. You cannot expect to be compensated with higher return for risk you could otherwise diversify away. II. Diversification is necessary to reduce unsystematic risk III. Total Risk can be found by adding an asset's Beta to its Standard Deviation I and II only All are false All are true II and III only II only You are considering whether you should start a mini apple farm. It requires an initial investment of $55,000; the farm will bring in $22,000 in year 1; the cash inflows will increase by 5% in years 2 and 3. There are no cash inflows after Year 3. What is the project's Internal Rate of Return? 9.7% 8.9% 10.0% 14.4% 12.3%