The Meat Corporation has a capital structure made up of 40\% debt and 60% equity, given a tax rate of 30%. The company will issue $1000 face value bonds maturing in 20 years with a coupon of 9% at a price of $1,098.18the current market interest rate on the bonds of a similar risk profile is 8%. The firm is planning to common stock at a price of $45. The next expected dividend on the stock is $2.70. The dividend for the firm is expected to grow at a constant annual rate of 5% per year indefinitely. The company has the following two INDEPENDENT projects availableProject 1 has an initial outlay of \$10,000 and an IRR of 10%. Project 2 has an initial outlay of \$100,000 and an IRR of 11%. Which of the above projects should the company REJECT?

Select one

a.Project 1

b. Project 2

c. Both projects

d. Neither project

Which of the following statements is CORRECT?

Select one

a. All corporations always have two costs of equity, one for common equity, and one for preferred equity,

b. The cost of debt capital is obtained by substituting the band price in the bond valuation equation and salving for the required return

c. The Capital Asset Pricing Model is preferred over the Dividend Valuation Model in estimating the cost of common equity for a corporation

d. The market risk is the synonym for market risk premium.

The Apple Corporation has preferred stock that can be sold for $21 per share. The preferred stock pays an annual dividend of $3.50. The company tax rate is 35%. The COST OF PREFERRED STOCK :

Select one:

a.14.3\%

b .16.7\%

c. 18.9\%

d. 17.7 %

The common stock of the Turmeric Corporation sells for $55 , and dividends paid last year were $ 1.35 . The dividends are predicted to have a 10 % growth rate. What is the COST OF EQUITY for the firm?

Select one:

a 12.71%

b .2.45%

c 2.71% .

d.12.45\%

The Mutton Corporation has a capital structure made up of 40 % debt and 60 % equity , given a tax rate of 30 % The company will issue face value bonds maturing in 20 years with a coupon of 9 % at a price of $ 1,098.18 . the current market interest rate on the bonds of a similar risk profile is 8 % . The firm is planning to common stock at a price of $ 45 . The next expected dividend on the stock is $ 2.70 . The dividend for the firm is expected to grow at a constant annual rate of 5 % per year indefinitely . The company has the following two INDEPENDENT projects available . Project 1 has an initial outlay of and an IRR of 7 % . Project 2 has an initial outlay of and an IRR of 11 % . Which of the above projects should the company REJECT ? \$100,000; \$10,000 Select one :

a . Project 2

b . Neither project

c . Both projects

d. Project 1