1. Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 40%, rd= 6%, rps= 7.9%, and rs= 14%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places.
2. David Ortiz Motors has a target capital structure of 45% debt and 55% equity. The yield to maturity on the company's outstanding bonds is 9%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 11.55%. What is the company's cost of equity capital? Round your answer to two decimal places.
3. A company's 8% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at a price of $640.49. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint:Base your answer on thenominalrate.) Round your answer to two decimal places.
4. Messman Manufacturing will issue common stock to the public for $25. The expected dividend and the growth in dividends are $2.25 per share and 5%, respectively. If the flotation cost is 8% of the issue's gross proceeds, what is the cost of external equity, re? Round your answer to two decimal places.