QUESTION 1:

ABC, Inc., has 168 shares of common stock outstanding at a price of $33 a share. They also have 272 shares of preferred stock outstanding at a price of $71 a share. There are 123, 8 percent bonds outstanding that are priced at $23. The bonds mature in 16 years and pay interest semiannually. What is the capital structure weight of the preferred stock?

Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 2:

The 7 percent annual coupon bonds of the ABC Co. are selling for $950.41. The bonds mature in 8 years. The bonds have a par value of $1,000 and payments are made semi-annually. If the tax rate is 35%, what is the after-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 3:

The 8.5 percent annual coupon bonds of the ABC Co. are selling for $1,179. The bonds mature in 12 years. The bonds have a par value of $1,000. If the tax rate is 30%, what is the after-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 4:

The before-tax cost of debt is 15.7 percent. What is the after-tax cost of debt if the tax rate is 46 percent?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 5:

You purchased the stock of Sargent Motors at a price of $24.9 one year ago today. If you sell the stock today for $27, what is your holding period return?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 6:

ABC Industries will pay a dividend of $2 next year on their common stock. The company predicts that the dividend will increase by 6 percent each year indefinitely. What is the firm's cost of equity if the stock is selling for $39 a share?

Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.

QUESTION 7:

You were hired as a consultant to ABC Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The before-tax cost of debt is 8.00%, the cost of preferred is 7.50%, and the cost of common is 12.75%. What is its WACC if the tax rate is 25%?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 8:

The 8 percent annual coupon bonds of the ABC Co. are selling for $1,080.69. The bonds mature in 10 years. The bonds have a par value of $1,000. What is the before-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 9:

You were hired as a consultant to ABC Company, whose target capital structure is 35% debt, 15% preferred, and 50% common equity. The before-tax cost of debt is 6.50%, the yield on the preferred is 6.00%, the cost of common stock is 11.25%, and the tax rate is 40%. What is the WACC?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 10:

Several years ago, the ABC Company sold a $1,000 par value bond that now has 15 years to maturity and a 6.50% annual coupon that is paid semiannually. The bond currently sells for $980 and the company's tax rate is 35%. What is the after-tax cost of debt?

QUESTION 11:

If the market value of debt is $156,462, market value of preferred stock is $51,970, and market value of common equity is 347,553, what is the weight of preferred stock?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 12:

The ABC Company has a cost of equity of 20.3 percent, a pre-tax cost of debt of 6.8 percent, and a tax rate of 30 percent. What is the firm's weighted average cost of capital if the proportion of debt is 26.1%?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 13:

If the market value of debt is $108,464, market value of preferred stock is $91,066, and market value of common equity is 226,404, what is the weight of common equity?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 14:

ABC Industries will pay a dividend of $2 next year on their common stock. The company predicts that the dividend will increase by 7 percent each year indefinitely. What is the dividend yield if the stock is selling for $35 a share?

Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.

QUESTION 15:

ABC Inc.'s perpetual preferred stock sells for $59.9 per share, and it pays an $9.3 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of $4 per share. What is the company's cost of preferred stock for use in calculating the WACC?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 16:

The 8 percent annual coupon bonds of the ABC Co. are selling for $880.76. The bonds mature in 10 years. The bonds have a par value of $1,000 and payments are made semi-annually? What is the before-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 17:

The risk-free rate is 4.3%, the market risk premium is 6%, and the stock's beta is 1.4. What is the cost of common stock (Ke)?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 18:

Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company's tax rate is 40%. What is the after-tax cost of debt?