1. Assume that you purchased 110 shares of stock for $37 a share, that you received an annual dividend of $2.90 a share, and that you sold your stock for $47 a share at the end of one year. What is the total return for your investment? (Ignore commission amounts)
2. Genetech has $4,000,000 in assets. It has decided to finance 30% with long-term financing (9% rate) and 70% with short-term financing (7%) rate. Assuming a 40% tax rate, what will its annual after-tax interest costs be?
3. You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of retained earnings is 13.25%, and the tax rate is 40%. The firm will not be issuing any new stock. What is Quigley's WACC?
9.16%
11.20%
9.25%
9.44%
9.99%