Reactive Power Generation has the following capital structure. Its corporate tax rate is 30%.

SecurityMarket ValueRequired Rate of Return

Debt$10million 6%

Preferred stock 30million 8

Common stock 60million 12

What is its WACC?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

WACC ---%

2. In 2015, Caterpillar Inc. had about 580 million shares outstanding. Their book value was $39.3 per share, and the market price was $70.50 per share. The company's balance sheet shows that the company had $26.00 billion of long-term debt, which was currently selling near par value.

a.What was Caterpillar's book debt-to-value ratio?(Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.)

b.What was its market debt-to-value ratio?(Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.)

3. Olympic Sports has two issues of debt outstanding. One is a 7% coupon bond with a face value of $37 million, a maturity of 10 years, and a yield to maturity of 8%. The coupons are paid annually. The other bond issue has a maturity of 15 years, with coupons also paid annually, and a coupon rate of 8%. The face value of the issue is $42 million, and the issue sells for 96% of par value. The firm's tax rate is 30%.

a.What is the before-tax cost of debt for Olympic?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b.What is Olympic's after-tax cost of debt?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

4. A share of stock with a beta of 0.67 now sells for $42. Investors expect the stock to pay a year-end dividend of $3. The T-bill rate is 4%, and the market risk premium is 7%. If the stock is perceived to be fairly priced today, what must be investors' expectation of the price of the stock at the end of the year?(Do not round intermediate calculations. Round your answer to 2 decimal places.)