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How firms estimate their cost of capital: The WACC for a firm is 19.75 percent. You know that the firm is financed<br />
with $75 million of equity and $25 million of debt. The cost of debt capital is 7 percent. What is the cost of equity<br />
for the firm?<br />
19.75%<br />
32.50%<br />
24.00%<br />
58.00%<br />
Multiple Choice Question 61<br />
The cost of debt: Bellamee, Inc., has semiannual bonds outstanding with five years to maturity and are priced at<br />
$920.87. If the bonds have a coupon rate of 7 percent, then what is the YTM for the bonds?<br />
4.5%<br />
9.0%<br />
7.0%<br />
9.2%<br />
Multiple Choice Question 63<br />
The cost of debt: Beckham Corporation has semiannual bonds outstanding with 13 years to maturity and are<br />
currently priced at $746.16. If the bonds have a coupon rate of 8.5 percent, then what is the after-tax cost of debt<br />
for Beckham if its marginal tax rate is 35%? Assume that your calculation is made as on Wall Street<br />
8.125%<br />
12.890%<br />
6.250%<br />
12.500%<br />
Multiple Choice Question 67<br />
The cost of equity: RadicalVenOil, Inc., has a cost of equity capital equal to 22.8 percent. If the risk-free rate of<br />
return is 10 percent and the expected return on the market is 18 percent, then what is the firm's beta if the firm's<br />
marginal tax rate is 35 percent?<br />
4.10
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