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A firm has 54,000 shares of common stock outstanding with a book value of $8 per share and a market value of $13. There are 17,000 shares of preferred stock with a book value of $18 and a market value of $22. There is a $1,000,000 face value bond issue outstanding that is selling at 106% of par. What weight should be placed on the debt when computing the firm’s WACC?

What is the approximate market price of preferred stock that pays an $8.00 dividend and has a book value of $100. The required return is 8.9% and the tax rate is 35%?

Individual stocks are:

Which one of the following bonds would be likely to exhibit a greater degree of interest rate risk?

Part II: Short Problems begins here–Answer 5 of the following 9 questions @ 6 points each. Select yes if you understand the instructions, and continue the exam.

Match the following.A) aquifer B) pH C) dam D) levee E) Edwards aquifer F) Carrizo aquifer G) turbidity H) aqueduct I) water table J) Ogallala aquifer The largest aquifer in the United States, it supports a lot of the agriculture throughout the Great Plains region. 

A stock has a required return of 8%, the risk-free rate is 3.5%, and the market risk premium is 2.5%. a) What is the stock’s beta? b) If the market risk premium increased to 4%, what is the stock’s new required rate of return? Assume that the risk-free rate and the beta remain unchanged.

Bae Inc. is considering an investment that has an expected return of 24% and a standard deviation of 10%. What is the investment’s coefficient of variation? Do not round your intermediate calculations. Round the final answer to 2 decimal places.

Francis Inc.’s stock has a required rate of return of 10.25%, and it sells for $80.00 per share. The dividend is expected to grow at a constant rate of 6.00% per year. What is the expected year-end dividend, D1?

A furniture store is offering free credit on purchases over $1,000. You observe that a big-screen television can be purchased for nothing down and $4,000 due in one year. The store next door offers an identical television for $3,650 but does not offer credit terms. Which statement below best describes the cost of the “free” credit?