tar quarterback for the Spring Bay Smashers, would like to invest a small portion of his earnings in stocks in one of three firms. His estimated returns and the probabilities of their occurrence follow.

Grasshopper Tractor	Galaxy Communication	Breathiest Electronics
,1 $750	.2 $0	.1 $300
.3 $800	.2 $675	.2 $600
.4 $900	.4 $750	.3 $700
.2 $1,200	.2 $900	.4 $1,100

Which stock would you recommend to Bill?

Question 16 options:

1)	Galaxy Communications

2)	Grasshopper Tractor

3)	Breathiest Electronics

4)	All stocks are equally appealing.

A firm's preferred stock pays an annual dividend of $2.50, and the stock sells for $65. Flotation costs for new issuances of preferred stock are 4.5% of the stock value. What is the after-tax cost of preferred stock if the firm's tax rate is 30%?

Question 7 options:

1)

4.03%

2)

1.58%

3)

3.20%

4)

5.26%

The Dammon Corp. has the following investment opportunities:

Machine A ($10,000) Inflows	Machine B ($22,500) Inflows	Machine C ($25,500) Inflows
Year 1: $6,000 Year 2: $3,000 Year 3: $3,000 Year 4: -0-	Year 1: $12,000 Year 2: $7,500 Year 3: $1,500 Year 4: $1,500	Year 1: - 0- Year 2: $30,000 Year 3: $5,000 Year 4: $20,000

Under the payback method and assuming these machines are mutually exclusive, which machine(s) would Dammon Corp. choose?