Suppose that a firm has $500K in long term debt, $25K in preferred stock and $375K in common equity. These are market values Assume the yield on the long term debt is 5.6%, the tax rate is 22%, the dividend on the preferred stock is 4.75% and the firm has a market beta of 1.25 . The risk free rate is 2.5% and the market risk premium is 6.31% Suppose the fimm added $200K in debt and the yield on all the debt was 5.8%. If everything else remains the same, what is the new WACC? A. 5.75% B. 6.53% C. 7.14% D. 8.68% QUESTION 16 What must occur to make using net cash flows into the firm result in the same estimate of value as using dividends paid out of the firm? A. the firm must paly an increasing dividend payment each year B. The cont of equity must be greater than the overall WAcC C. the firm must generate a rate of retum on teinvested free cash fow equal to the discount rate used by the investor D. Al of the above must occur Suppose we are given the following intormation for a firm: What is the estimated stock price of the firm using the dridends valuation method? A. 56523 B. 587.45 C. 590.45 0.3120 .40 Suppose we are given the following information for a firm: What is the estimated stock price of the firm using the dividends valuation method? A. $65.23 8. $67.45 c. 599.45 D. 5120.40