1. Carlson Tech's stock has a beta of 1.15 and a 10.5% required rate of return. The return on the market portfolio is 10%. Find the risk-free rate.
2. The primary reason WACC uses an after-tax cost of debt is…
a) that this lowers overall WACC and so increases the chances of obtaining a positive NPV.
b) interest expense is accounted for before taxes are determined, thus reducing taxable income.
c) taxes are paid after operating expenses and depreciation.
3. Compute double declining balance depreciation for;
One laboratory equipment cost $530,000 and has an expected life of 8 years. The salvage value is 10 percent of the cost. Show all work from year 1 until year 8.