1) MPS has found that it's common equity capital shares have a beta equal to 1.5 while the risk-free return is 8% and the expected return on the market is 14% its cost of debt financing is 12%. If the firm is financed with $120,000,000 of common shares (market value) and $80,000,000 of debt then what is the after-tax weighted average cost of capital for MPS if it is subject to a 35% marginal tax rate.
2 ) L corp expects to pay no dividend for the next four years. It has projected a growth rate of 35%for the next four years after four years, the firm will grow at a constant rate of 6%. Its first dividend to be paid in year 5 will be worth$4.25. If your required rate of return is 20%, what is the stock worth today?
3) Dresner has offered the following exchange rate quotes on Indian rupees (Rs): Rs.83.7612/Euro and $1.8654/Euro. what is the cross rate between the indian Rupees and the US dollar?