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1. Manteca Co. issues only common stock and coupon bonds. The firm has a debt-equity ratio of 1/3. The cost of equity is 13.7 percent and the pre-tax cost of debt is 9.4 percent. The tax rate is 35 percent. What is its weighted average cost of capital (WACC)?
12.82 percent
11.80 percent
9.87 percent
10.66 percent
2. The cost of capital is:
the return on the overall market.
another term for the market risk premium.
the minimum required return on a new investment.
another term for the risk-free rate of return.
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If the distillery had consistently earned pre-tax profit of EUR 1.5 million per year on annual production and sale of 1 million litres, what would happen to profit if it increased production to 1.2 million litres per year?
Mr. R. owns 20,000 shares of ABC Corporation stock. The company is planning to issue a stock dividend. Before the dividend Mr. R. owned 10 percent of the outstanding stock, which had a market value of $200,000, or $10 per share. Upon receiving the 10..
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