USD mn	2011	2012
Debt balance	200	?
Debt drawdown		25
Debt repayment		(10)
Cost of Debt		10%
Total Assets	500	600
Tax		10%

1. What is the weighted average cost of debt for the firm in 2012 (nearest value)?

Select one:

a.3.55%

b.3.00%

c.3.33%

d.3.22%

2. The Cost of Equity is 15% . Using the information in the above table and Q 16, please calculate the weighted average cost of equity for the Company?

Select one:

a.9.70%

b.9.62%

c.10.00%

d.10.15%

3. Using Question 17 and 16, please calculate the WACC of the Company

Select one:

a.12.85%

b.12.90%

c.13.15%

d.12.79%

4. The Companys current D/A ratio is 1:2 but it intends to reduce it to 1:3. Use the Cost of debt, tax, cost of equity values from above questions and recalculate the WACC?

Select one:

a.14%

b.13.33%

c.13%

d.14.33%

5. If the D/E of a company increases, how does the Cost of Equity change?

Select one:

a.Remain same

b.Increase

c.Decrease

d.None of the above