Use the following information to answer questions 20 through 25

A corporation has 10,000 bonds outstanding with a 6% annual coupon rate, 8 years to maturity, a $1,000 face value, and a $1,100 market price.

The company's 500,000 shares of common stock sell for $25 per share, have a beta of 1.5, the risk free rate is 4%, and the market return is 12%.

20

What isthe market value of equity for this corporation?

A.

$5 million

B.

$11 million

C.

$12.5 million

D.

$4 billion

E.

none of the above

21

What is the market value of debt for this corporation?

A.

$10 million

B.

$11 million

C.

$1 billion

D.

$1.1 billion

E.

none of the above

22

What is the cost of equity for this corporation?

A.

6%

B.

12%

C.

16%

D.

22%

E.

none of the above

23. What is the pretax cost of debt for this corporation?

A.

2.69%

B.

4.48%

C.

6.00%

D.

8.97%

E.

none of the above

24. Assuming a 40% tax rate, what is this corporation's after tax cost of debt?

A.

2.69%

B.

4.48%

C.

6.00%

D.

8.97%

E.

none of the above

25. What is the weighted average cost of capital for this company?

A.

9.34%

B.

9.77%

C.

10.24%

D.

10.61%

E.

none of the abov