1. Camper,Inc. is interested in acquiring Baxter Corp. Baxter has 30 million shares outstanding. Baxter's pre-tax cost of debt is 10% its cost of equity is 15%, and its tax rate is 35%. Its target capital structure is 45% debt and 55% equity. What is the weighted average cost of capital (WACC)?

13.8%

11.80%

11.20%

9.90%

None of the above

2. Crowl Corporation is investigating automating a process by purchasing a machine for $801,900 that would have a 9 year useful life and no salvage value. By automating the process, the company would save $137,500 per year in cash operating costs. The new machine would replace some old equipment that would be sold for scrap now, yielding $22,100. The annual depreciation on the new machine would be $89,100. The simple rate of return on the investment is closest to (Ignore income taxes.):

5.21%

11.21%

6.21%

16.81%