Reference no: EM132484130

Stock A's stock has a beta of 1.30, and its required return is 11.50%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.)

Select the correct answer.

a. 8.97%

b. 9.04%

c. 8.90%

d. 9.11%

e. 9.18%

Fiske Roofing Supplies' stock has a beta of 1.23, its required return is 10.75%, and the risk-free rate is 4.30%. What is the required rate of return on the market? (Hint: First find the market risk premium.)

Select the correct answer.

a. 9.54%

b. 9.27%

c. 9.36%

d. 9.45%

e. 9.63%

Kenny Electric Company's noncallable bonds were issued several years ago and now have 20 years to maturity. These bonds have a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000. If the firm's tax rate is 25%, what is the component cost of debt for use in the WACC calculation?

a. 5.73%

b. 5.44%

c. 6.03%

d. 6.35%

e. 6.67%

Perpetual preferred stock from Franklin Inc. sells for $97.50 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?

a. 9.44%

b. 10.22%

c. 8.72%

d. 9.82%

e. 9.08%