1. A stock has an expected return of 12.4 percent and a beta of 1.37. The market expected return is 10 percent. What must the risk-free rate be?
2. King Fisher Aviation has a target capital structure of 72 percent common stock and 28 percent debt. Their cost of equity is 12 percent and the cost of debt is 5 percent. The tax rate is 40 percent. What is King Fisher's WACC?
3. If a business only focus is on short term profits ( Revenues - Expenses = Net Income/Profit). Is this the same as maximizing shareholder wealth? Why or why not. Will this business be successful in the long run in your opinion?