1. If the present value of an ordinary, 6-year annuity is $9,100 and interest rates are 9.5 percent, what’s the present value of the same annuity due? (Round your answer to 2 decimal places.)
2. A stock has a beta of 0.8. The market return is 14% and the risk free return is 3%. Compute the required return for this stock.
3. According to the tradeoff model of capital structure, which is true at the optimal capital structure?
A) Earnings per share is maximized
B) WACC is minimized
C) The total value of equity is maximized
D) Return on Equity is Maximized