Questions -
Q1: CJ Co stock has a beta of 0.9, the current risk-free rate is 5.6, and the expected return on the market is 13 percent. What is CJ Co's cost of equity?
Q2: TAB Inc. has a $100 million (face value), 10-year bond issue selling for 95 percent of par that pays an annual coupon of 8.5 percent. What would be TAB's before-tax component cost ofdebt?
Q3: Pumpkin Pie Industries has 5 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10 thousand bonds. If the common shares are selling for $50 per share, the preferred shares are selling for $31 per share, and the bonds are selling for 98 percent of par, what would be the weights used in the calculation of Pumpkin Pie's WACC for common stock, preferred stock, and bonds, respectively?
Q4: GJ Industries has 10 million shares of common stock outstanding with a market price of $15.00 per share. The company also has outstanding preferred stock with a market value of $20 million, and 200,000 bonds outstanding, each with face value $2,000 and selling at 100% of par value. The cost of equity is 10%, the cost of preferred is 8%, and the cost of debt is 7.50%. If GJ's tax rate is 34%, what is the WACC?