Question
You can exchange 100 for $106.38 currently. The inflation rate in Euroland is expected to be 5.3% as compared to 3.67% in the U.S. Assuming
You can exchange €100 for $106.38 currently. The inflation rate in Euroland is expected to be 5.3% as compared to 3.67% in the U.S. Assuming that relative purchasing power parity exists, the exchange rate 3 years from now should be:
a. | €0.8011/$1 | |
b. | €0.9703/$1 | |
c. | €0.9867/$1 | |
d. | €0.8128/$1 |
A company has a cost of debt of 7%, a cost of equity of 11%, and a cost of preferred stock of 8%. The firm has 104,000 shares of common stock outstanding at a market price of $20 a share. There are 40,000 shares of preferred stock outstanding at a market price of $34 a share. The bond issue has a total face value of $1,000,000 and sells at 104% of face value. The tax rate is 21%. What is the company's weighted average cost of capital?
a. | 8.61% | |
b. | 8.82% | |
c. | 6.54% | |
d. | 6.19% |
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