1. Concord Printing purchased a machine five years ago at a cost of $650,000. The machine is being depreciated using the straight-line method over ten years. The tax rate is 35 percent and the discount rate is 10 percent. If the machine is sold today for $420,000, what will the aftertax salvage value be?

$350,607

$386,750

$330,918

$298,650

$274,500

2. Neptune Cruise has 350,000 shares of common stock outstanding at a market price of $46 a share. Last month, Neptune Cruise paid an annual dividend in the amount of $0.80 per share. The dividend growth rate is 5%. Neptune Cruise also has 12,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 6% coupon, pay interest annually, and mature in 10 years. The bonds are selling at 102% of face value. The company's tax rate is 34%. What is Neptune Cruise's weighted average cost of capital?

5.91%

5.78%

6.42%

5.51%

6.18%