1. Describe how U.S. interest rates have been affected by the domestic housing market over the past year. What do you think has affected interest rates the most?
2. FarCry Industries, a maker of telecommunications equipment, has 3 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares sell for $27 per share, the preferred shares sell for $14.50 per share, and the bonds sell for 98 percent of par. What weight should you use for preferred stock in the computation of FarCry’s WACC?