1. Assume that you are on the financial staff of Vanderheiden Inc., and you have collected the following data: The yield on the company’s outstanding bonds is 7.75%, its tax rate is 40%, the next expected dividend is $0.65 a share, the dividend is expected to grow at a constant rate of 6.00% a year, the price of the stock is $17.00 per share, the flotation cost for selling new shares is F = 10%, and the target capital structure is 45% debt and 55% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget?

8.48%

10.01%

7.80%

6.79%

7.63%

2. The Canadian subsidiary of a U.S. firm has net exposed assets of -CAD 35,000. If the Canadian currency changes its value from CAD1.25/USD in year 1 to CAD1.28/USD in year 2, the U.S. firm will have a translation ________.

A. gain of USD 1,050

B. loss of of USD 1,050

C. gain of USD 656.25

D. loss of USD 656.25